Internet Of Things in Insurance

The Internet of things (IoT) is the network of physical devices, vehicles, home appliances, and other items embedded with technology that enables the devices to communicate and interact over the Internet  making it possible to remotely monitor and control them.

It is estimated that there were 8.4 Billion IoT devices in the world as at 2017 which was a rise by 31% from the year 2016. It is estimated that there will be 30 Billion devices by 2020 which will form a market of approximately $7.1 trillion. It is also estimated that 5.5 million IoT devices are being produced on a daily basis. (Nordrum, 2016)

IoT creates an advanced solution in the insurance industry. This will enable creation of a platform through which insurers can interact with their policyholders and partners in enabling efficient risk mitigation and pricing of products. Internet Of Things can impact the Kenyan insurance industry in these 3 areas:

  • Geo-spatial Applications

Geo-spatial application is concerned with the relative position of things on the earth surface. This application can prove to be a game changer in vehicle insurance businesses. The insurers can rely on the ‘telematics’ to clearly understand and analysis different historical data on the vehicle and its user. The insurer can be able to analyze driver behavior, vehicle condition, distance covered and other relevant information. This can then be used to inform the pricing of the car’s insurance. Proper adoption of this technology can result in adoption of Usage-Based Insurance (UBI) where the insured’s premium will depend on his/her usage of the vehicle. Good drivers will then be rewarded with lower priced premiums. These devices can also assist in providing crucial information required before payment of an insurance claim. The devices can be used to retrieve stolen vehicles hence also reducing risk of costly theft claims.

  • Connected Bio-metrics

This entails wearable devices that relay real time and historical information of the person wearing them. These devices relay relevant information such as calories burnt, steps taken, blood pressure, temperature and heart health. The wearable devices can in turn offer great benefits to both the insured and the insurer. The insured can be able to monitor his or her health conveniently and make necessary adjustments in dieting and lifestyle. The insured on the other hand can use this information to mitigate and manage risks of claims. The devices can be used as a proactive approach in advising the insurance clients before an illness strikes, during the illness and after the illness.

  • Environmental Sensors

Environmental sensors are set to transform the  risk management industry in general. This appliances comprise of smart sensors that send alerts to property owners and other stakeholders on impending risks. This alerts may be sent to an individual or a group hence enabling rapid response to mitigate risks. The senors may detect smoke fumes, gas leakages, water flooding, intruder break ins and other special factors such as carbon monoxide. This can help save lives and property within a home or business setup. Consequently this will reduce probability of accidental loss and loss from theft. The environmental sensors can also enable lower premium charges due to lower risk levels.


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