Did you receive a “smart” gift during the holidays? Maybe a smartwatch, fitness tracker or other wearable connection to the Internet. Perhaps you’ve updated your house with smart features to keep it comfortable and secure. If you did, you are now part of the Internet of Things, which refers to objects and systems connected online to exchange information.
By the end of 2015 there were about 5 billion “things” connected to the Internet, and an estimated 25 billion by the end of 2020. This is more than three such items for every person on the planet. This has implications for everything from health monitoring, to packing labels, to ingestible pills that can be connected to the Internet—as well as home and auto insurance.
Homeowners can now control temperatures from a smartphone or tablet, helping them save on their energy bills. You can control lighting, appliances, communication systems, entertainment and home security devices, helping to reduce risk. Cars are increasingly automated, with data transfers that network the car to systems outside the car itself and the driver. In fact, the hands-free car is quickly becoming reality.
Apple Watch, Amazon Echo, and Nest all interact with network sensors that measure and transmit their internal or external condition. In auto insurance we see this in the use of sensors to track driving factors. Insurers then use this data to fine-tune a policyholder’s pricing so it accurately reflects their risks.
In the future, with the prevalence of smart cars and houses, you can expect your insurance coverage to reflect the new world. Your local independent agent can keep you up to date on these changes. Insurance underwriting will be more exact and precisely tailored to a policy holder. Insurance has always focused on understanding and pricing risk and paying losses. Insurers now will have data on hazards and risks that can be used to prevent and reduce losses. With this data, they can develop products and services that fit your needs in a very tailored way. Now, that is smart!