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Insurance in the age of the IoT

At a glance

  • The Internet of Things (IoT) is no longer a new concept – but it is evolving more rapidly than ever
  • The smart, or connected devices, that make up the IoT, and the data they hold, have the potential to disrupt the insurance industry
  • We explore how insurers are responding and the potential benefits for customers

The Internet of Things (IoT) has been around longer than you might think. In fact, university researchers were exploring the concept of the IoT as long ago as the 1980s, using an internet-connected fridge to save themselves the trouble of walking over to see if their drinks were cold enough.

What has changed in recent years, however, is the surge in the number of internet-connected devices in use, from smart speakers to smart thermostats.  IOT Analytics estimates the number of connected devices will be 34.2 billion globally by 2025. In this article, we discuss some of the ways insurers are looking to exploit the possibilities of the Internet of Things, and the potential benefits for customers.

IoT in the home

In a short space of time, the ‘smart home’ has shifted from concept to reality. As well as making our lives more comfortable and enjoyable, smart home devices are also having an impact on home insurance propositions. In 2019, 22% of UK households now own a voice-controlled digital home assistant device, doubling the 11% figure recorded in 2017.

For example, many connected home devices relate to security, such as smart locks and burglar alarms. Zurich is among the insurers who have partnered with manufacturers to offer incentives to customers for installing smart home security devices.

With escape of water accounting for a fifth of domestic property claims, a number of insurers have also provided rewards or incentives for customers who install smart water leak detection devices.

IoT in the workplace

Internet of Things devices also have the potential to make workplaces safer, more comfortable and more efficient. The potential benefits include:

  • Loss detection and prevention – e.g. minimising water leaks and mechanical/electrical faults
  • Minimising business interruption and repair costs
  • More efficient maintenance – i.e. using connected device data to predict when maintenance is actually needed, rather than using a time-based approach
  • Energy efficiency – through control of heating and lighting systems and a clearer understanding of how and when different areas of a workplace are being used

Data from connected devices in the workplace could also help insurers to provide more personalised, risk management solutions for businesses, which could potentially lead to fewer losses and ultimately to cheaper premiums.

Zurich piloted a property telematics project with a number of customers across the public and private sectors. The project  explored the benefits of using data from sensors to detect risks such as burst pipes, electrical fires and machinery failure.

IoT on the move

Telematics devices that can track driver behaviour have been disrupting the motor insurance market for a number of years. As with smart home devices, the key benefit of vehicle telematics systems is that they allow insurers to provide more personalised insurance propositions that take into account individual driver behaviour.

Wearable connected devices are having a similar impact on other lines of cover. Some health insurers, for example, are partnering with technology firms and providing incentives, including premium discounts and other rewards, for customers who are willing to share data from their wearable fitness devices.

Zurich’s solution

As part of the development of IoT, Zurich has worked to make data exchange easier between customer’s and broker’s systems, in order to better analyse real-time data from their own Risk Management Systems. This is known as Application Programme Interface (API).

This approach allows both Zurich and the customer to better track and assess their risks, and building telematics forms a key part of this. The data can be accessed by the customer though their My Zurich portal.

Future innovations in the Internet of Things

The possibilities offered by the Internet of Things will only increase as more and more devices become connected. For insurers and customers, this could mean ever more personalised propositions, that better reflect the risk presented by an individual or organisation.

For example, if a customer was willing to share data from multiple connected devices – from a wearable fitness tracker to a smart thermostat, to their vehicle telematics system – an insurer might in theory be able to provide a personalised package of health, home and motor cover.

What is certain, is that in the age of the Internet of Things, demand from customers for more personalised premiums that take into account individual behaviour and usage, is only likely to increase, and insurers need to ensure their propositions reflect this trend.

For more information, please speak with your local Zurich contact.


This article counts towards accumulating your annual CII CPD structured learning hours for Artificial Intelligence.

By reading this article, and correctly answering the three questions underneath, you will have achieved the following learning outcome: Explain how AI is being used within the insurance industry and identify its key benefits to insurers and brokers.

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