In recent years insurers have seen a step change in regulatory reporting and a need to prove their business models are responsible and sustainable. The level of transparency has never been higher. This has posed more than an issue for insurers, often resulting in them running multiple Solvency II projects and tool implementations, often at great expense and adding little to their bottom line. It's forced a lot of businesses to consider how they pull their data sources together, how best to consolidate them, and how they ensure their reporting is correct and accurate (two different things!). For some it's been baptism by fire... and then Internet of Things (IoT) comes along.
The potential of IoT for insurers is HUGE. It could be a wearable health tracker, a telematic device for vehicle tracking, a smart anti-intrusion monitoring device in the home, any number of applications. Each of them provide insight, in real-time and allow Insurers to adjust rates, pricing, risk models, reserves, control their entire business model. The only issue a lot of insurers face is how do they control this new stream of data. IoT provides A LOT of data. An awful lot of data.
To make the best use of that data, it needs to find its way in multiple models as quickly as possible. The data needs to be understood and acted upon to yield the best value, and provide the business a competitive advantage.
Being the pain and expense most insurers have been through (and are probably still going through) for regulatory pieces like Solvency II, it could be a step too far for their skills and resource pools. However if they fail to embrace IoT with all of its scary data implications, they will be left behind.
Moreover, as well as the data itself, architecturally there is a tonne of considerations around how the data is collected, transmitted, stored, encrypted, and with GDPR arriving next year, aside from streaming the data to make best use of it, systems need to address all of these issues.
My advice would be to speak to a partner who can help you through the initial design phase, take a fresh look at your current estate, and start you on the journey. Take an iterative approach and don't be intimidated by the huge amount of possibilities. It's just data, and it can be secured and moved around your operation. Also understand that implementing something as innovative as IoT is not a 'once and done', it will take constant tweaks to get the most value from it, and (more importantly) to give you the most competitive advantage. However once the basics are in place it should be very easy to adopt change around IoT as if it were always a part of the business.
Even though financial services companies are warming up to IoT, they still have misgivings about feeding sensitive data into networks with innumerable endpoints. A security breach can compromise critical customer data like addresses, card details and personal information, resulting in loss of brand value for the financial organization. Service providers than can offer a guarded infrastructure for networked smartphones, wearables and on-board diagnostic devices, are most likely to succeed in the evolving market. Furthermore, the General Data Protection Regulation (GPRD) will force financial institutions to strengthen data protection for European citizens to be compliant with the new regulation by May 2018.