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Are you ready for the internet of things?

Insurance will be profoundly different in a connected world. Success will depend on five key factors.


The Internet of Things (IoT) will eventually connect products, homes, enterprises and entire cities. This has the potential to fundamentally change the insurance industry. How can insurers take rapid and informed action given the dramatic changes the IoT will make to their traditional business models? We believe there are five keys to success:

  1. Choose the role you intend to play

    Insurers will need to operate in extended ecosystems, so should consider acting either as a service provider, supplying an innovative technology-based insurance product to a third-party ecosystem, or as a value aggregator, launching innovative and extended offerings beyond traditional insurance.

  2. Build and work on three combined layers: product, technology and service

    Insurers will need to define a connected offering model across three integrated layers: insurance product, technology, and ecosystem services. By leveraging a modular and flexible coverage structure and dynamic pricing, both personalized through analytics, they will be able to move from standardized “one-to-many” to “one-to-one” products. Technology will allow the customer to connect with the insurance product and ecosystem services, and will also enable ongoing consumer interaction. And insurers must ensure their services bring true value, can be monetized, and both value and take advantage of ecosystem partners.

  3. Extend, automate and adapt the insurance value chain

    Insurers need to develop new phases and processes, leveraging their partners and then outsourcing non-core activities. Labor-intensive processes can be automated with the aid of machine-to-machine interactions and predictive analytics capabilities, enabled by technologies such as big data and robotic process automation. In addition, core insurance processes must be continuously adaptive and iterative.

  4. Share and collaborate through an open architecture

    Insurers will need to open up to their ecosystem partners, sharing not only customer data, but customers themselves. To encourage and support such ecosystems, IT architectures will need to evolve, ensuring flexibility and interoperability with external partners and providers. A key challenge will be to orchestrate innovation and legacy evolutions while simultaneously managing security threats and changing IT processes to roll out and manage new products and services faster and cheaper.

  5. Foster a culture of innovation

    To promote innovation at all levels, insurers should design a governance structure that supports a fast and experimental approach to innovation while also managing business as usual. New organization structures and roles will be necessary. So will the infusion of the new culture across the whole organization, from idea generation to workforce training and onboarding. It should also be extended outside the company to its customers, to support education and awareness, leverage new and engaging tools and technologies, and take the opportunity to improve and enhance the company’s reputation. Effective leadership will be essential in creating a vision for the Internet of Things, and then putting in place the operating models to make that vision a reality. Considerable risks are involved in this transformation, but the risk of doing nothing is far greater.

For more on this topic, register to download Are You Ready to be an Insurer of Things?