It’s been said already: The Internet of Things will disrupt and impact many industries, from energy to healthcare; from automotive to manufacturing, and many others. We argued in our last post that insurance providers may be among the most potentially disrupted as connecting people and devices becomes mainstream. 

To insurance people or assets is all about assessing risk. Not much imagination is needed to realize Big Data and, more specifically, Big Data generated by connected people and devices is prompt to change how these risks will be assessed. IoT provides the insurance industry with more data than ever before, enabling companies to more effectively determine rates and provide services.

The opportunities are many, but companies working to build insurance IoT products or services will have to overcome several challenges. For instance, designing new business models able to deliver value to customers and doing it in a profitable way for insurance providers. Customer trust and adoption of IoT should also be considered. On the other hand, interoperability and compatibility, security and privacy and proper analytics are just few of other important challenges on the technology side. That’s why once again we think previously unthinkable collaborations and partnerships will be the best way to address these challenges.

New business models for a new insurance paradigm

In our last post we discussed how some of that sort of partnerships try to deal with the challenge of insurance things in an innovative way. The same thing can be said about insurance people.

Digital health can deliver a step-change in health risk assessment. We can imagine a scenario in which one day many people will use wearable and devices monitoring vital signs and context in order to improve wellness and health. Will then insurers determine rates and provide health insurance to their customers based on this data?

The impact could be massive. New business models might result in changes such as a new paradigm for delivering care more effectively or a population better motivated to take greater responsibility for their own health and wellbeing. There are a number of companies who are already tackling these issues, many of them building products that combine insurance with IoT technology and data. Some of them are doing so by collaborating with others.

For instance, American healthcare insurance company Aetna partnered recently with Apple to provide its members with a subsidized Apple Watch, which will come kitted out with Aetna-exclusive iOS health apps. The goal is to empower the patient, so they can manage their health and lifestyles better thanks to the data provided by the smartwatch and the apps included.  

Win/win

As in all good partnerships, the deal makes sense for both parts. For the insurer, incentivizing a healthier life means aiming to have customers spending less time claiming on health insurance policies or visiting their doctor. But the partnership also presents a big sales opportunity for Apple’s smartwatch, especially if other major health insurers follow suit.

The insurer will give away more than 500,000 Apple Watch. The Apple smartwatch recently overtook Fitbit as the top-selling wearable tracker and, in fact, Fitbit has also been looking to work with health insurers. UnitedHealthCare customers using Fitbit Charge 2 can get credits worth up to $1,500 in a program developed by both companies this year.

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