The Internet of Things is a digital trend in which normal, everyday objects are connected to one another via the Internet. An object that was never connected before can become “smart” thanks to new breakthroughs in technology. Smart homes allow homeowners to manage their energy efficiency more effectively. Smart cars can alert authorities in the event of a crash or an incapacitated driver. Smart refrigerators can keep track of the expiration dates of food products and alert the owner when food is about to go bad.
So what can this development mean for the insurance industry? For one, the multitude of connected devices provide accurate information that insurers can use to develop more customized products.
Paul Bermingham of Risk & Insurance provided one example of how these developments can help homeowners and insurers in the event of a natural disaster: “Say you own a building in Miami. You can match and profile your hurricane risk by the minute and remediate high-risk issues very quickly.”
Data from connected sensors can help insurers make more accurate valuations and risk assessments. Homeowners will have more information on the risk of nearby storms and floods. Real-time information can provide increased insight into each policyholder’s situation, allowing for products that are customized just for their insurance needs.
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