New Technologies & Data Conference 2021

From Risk Transfer to Risk Prevention – How the Internet of Things is reshaping business models in insurance

Dean Connor​, CEO of Sun Life Financial, opened the conference.

Internet of Things (IoT) applications are growing across all industries and generating enormous amounts of data from almost all areas of life. For insurance companies, such data can provide valuable insights, with the potential to predict and prevent risks.

The Geneva Association’s inaugural New Technologies & Data Conference, held virtually on 1 June 2021 and co-organised with Sun Life Financial, explored the trend of IoT-driven risk prevention services in insurance.

J Patrick Bewley, Founder and CEO of EVŌ​, gave the first keynote address.

J Patrick Bewley, Founder and CEO of EVŌ, explained that wellness is a very personal journey, and one that is multifaceted; physical activity, stress, nutrition and financial aspects all contribute to overall well-being.

Today, risk is encapsulated in people’s behaviours and decisions, which have typically been difficult to monitor and measure. IoT can help insurers obtain this information and link it to consumers’ personal journeys. However, IoT, smart watches and mobile phones are just one part of a larger ecosystem comprised of the cloud, advanced analytics, artificial intelligence (AI), socio-economic data, social data on health, and genetics. Insurers need to consider this whole ecosystem and go beyond simply offering discounts or rewards for healthy behaviour. More emphasis needs to be put on strategy and on creating solutions that are more relevant, more dynamic and more personalised to match individual journeys, especially for the younger generation. Business models of the future will focus on wellness and longevity, with insurance used as the warranty – in other words, it will be a feature in such models rather than the product. Challengers to traditional players have already started to bring these new business models into the market. To keep pace, insurers need to act now.

(Top) Isabelle Flückiger, Director New Technologies & Data, The Geneva Association; J Patrick Bewley, Founder & CEO, EVŌ. (Middle) Véronique Dorval, SVP & Chief Client Experience Officer, Sun Life Financial (Moderator); Simon Guest, CEO, Generali Vitality; Jane Wang, CEO & Co-founder, Optimity. (Bottom) Amanda Hosken, Global Head Life & Health Solutions, Swiss Re.

The life and health panel focused on what is really changing in insurance and what needs to be done to better reach consumers and address their needs.

Key messages:

• Risks are shifting. It is important for insurers to understand that people’s behaviour may be different from that implied by the data at the time of underwriting. This dynamic needs to be addressed for the best interests of the consumer.
• There are two goals. The first is better stratification of existing customers as well as daily interaction with them to encourage healthier and safer behaviour. The second is to address the protection gap and reach currently uninsured people that need protection. The big advantage of digital health is that insurance can be offered to these people at an affordable level; for example, it enables insurers to offer coverage for chronic diseases where before it was denied. The ultimate goal is to help people maintain a healthy lifestyle throughout their lives.
• Data forms the basis for all of this. The industry needs to comply with regulations but also take a stance, be transparent and actively show its intentions and the benefits to consumers. This has to be done in an upfront manner such that the uses and limitations are clear.

Matteo Carbone, Founder & Director of the IoT Insurance Observatory, gave the second keynote address.

Matteo Carbone, Founder and Director of the IoT Insurance Observatory, presented on how IoT is reshaping P&C insurance and the way business is done.

It is a myth that customers are only concerned about price. IoT data can be used to enhance the customer experience, to sell policies in new ways and to develop new knowledge about risks, making risk assessment more accurate. The shift towards real-time risk mitigation services in the P&C sector benefits society as a whole, but execution of the transformation requires multi-year commitment and IoT and leadership capabilities. The transformation to IoT-driven services is a strategic choice, not simply the development and launch of a new product.

(Top) Matteo Carbone, Founder & Director, IoT Insurance Observatory (Moderator); Sean Ringsted, Chief Digital Officer, Chubb; Gary Kaplan, President of Construction, AXA XL. (Bottom) Hari Balakrishnan, Founder & CTO, Cambridge Mobile Telematics, and Professor, MIT; Precious Nduli, Head of Technical Marketing and Vitality Drive Engagement, Discovery.

The P&C panel discussed successful examples of IoT-driven prevention services that have already been implemented, and the integration of these approaches into insurance value propositions.

Key messages:

• IoT applications for prevention are manifold across all lines of business, e.g. wearables to prevent improper lifting by workers, real-time alerts to risky situations in properties, digitalisation of underwriting, and the use of telematics to improve driver behaviour and enhance road safety.
• In traditional P&C insurance, insurers pay to repair or replace losses. This covers the claim up to a certain point but it does not address other inconveniences that are associated with claims. The shift towards prediction and prevention can provide real value because it helps avoid both the loss and the inconvenience.
• In commercial lines, devices that monitor insured assets over time provide insights to risk engineering teams who are able to advise on risk reduction in advance of any incident.
• With IoT, insurers can attract clients with prevention rather than price. There is no ʻone size fits all’ solution, allowing insurers to deliver different customer experiences. Each consumer has individual motivations that change over time, and these can be addressed at the individual level with IoT.
• It is important to recognise that IoT applications are different depending on each individual case, and the insurance industry is still learning. The key to finding the right solution is to first think about the customer experience and then build the application from there, rather than the other way around.