There is a general consensus that many business models in the insurance industry are not fit for the long term, or are already outdated. This is due to the continuing low interest rates, volatile customer requirements and rapid advances in digitisation. However, digitisation is also creating a range of opportunities for insurers, the potential of which practically only has to be tapped. A successful project at HSB illustrates what a solution based on digital technology offering both insurers and customers potential for savings could look like. Sensors detect damage at an early stage, thereby helping to confine it significantly.
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Sensors, the "internet of things" and the insurance industry
In January 2017 at the Consumer Electronics Show (CES), the leading world trade fair for consumer electronics in Las Vegas, smart products and services for buildings and households took pride of place. Endowed with their own IP address, appliances are connected to and can be controlled via the internet (the so-called "internet of things" – IoT). They get to know their users' habits and continuously and autonomously adapt their functions to them. Smart thermostats enable people to turn up the heating (on their way home, for example) via the internet or a smartphone application. If the heating is repeatedly turned up when the room temperature is below 16 degrees, the thermostat identifies a "habit" and starts adjusting the temperature when it falls below that level. Sensors have long had many uses outside?smart homes?and heat detection. Numerous other devices and applications rely on the technology, ranging from distance sensors built into?self-driving cars?to motion sensors for the protection of industrial facilities and leak detectors in public buildings.
Combining forces with smart sensor technology
The solution recently introduced by HSB is based on sensors used to monitor company plant and equipment remotely, with the aim of detecting damage quickly, or preventing it. "In designing this IoT-based early-warning system for insurers and their customers, HSB made use of its comprehensive data on plant and equipment and extensive experience", explained HSB President and CEO Greg Barats, adding "In our pilot project with specialist insurer Church Mutual Insurance Company, property damage of US$ 500,000 was avoided." An example of how the smart service works would be water pipes in thousands of religious buildings, which freeze up every year, possibly leading to water damage such as mould on brickwork. Particularly at risk are buildings that are not always fully occupied where the inside temperature and water levels cannot be monitored by person, such as a caretaker or a member of the service staff. In such buildings, temperature and water sensors can be fitted at points vulnerable to damage or in other exposed places – where priceless or irreplaceable objects are kept, for example. If a sensor detects low temperature or the presence of water, a warning is sent by SMS, e-mail or telephone to one or more contact persons enabling loss mitigation measures to be initiated quickly.
Good prospects for insurers
The success of the?pilot project?illustrates how IoT and sensor technology can create new business models for insurers. Bearing in mind that the technology is still maturing, its future looks promising – both in the internet of things and for the insurance industry.
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