Watson IoT

How IoT technology is helping insurers drive innovation

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Imagine that your elderly grandfather is driving home from the grocery store and makes a left turn onto the highway ramp. The only problem – it’s the exit, not the on-ramp! Thankfully, he has a connected car with a real-time monitoring device that immediately notes the wrong turn and sends an alarm through his car speakers and an app on his smart phone. He quickly realizes his mistake and pulls over before anyone can hit him. At the same time, his insurance company, and you, are alerted to the error, and that he is now safe.

Futuristic? Not really. An insurer in Japan is already implementing an IBM IoT Connected Vehicle Insights system that can detect these and other driving issues and raise alarms.

Industry differentiation: mitigating risk and satisfying customers

Today, approximately 70 percent of wrong-way driver incidents on highways in Japan are caused by those over 65, where the elderly population is large and growing. These incidents are top of mind and get lots of press. An insurer that can help give the elderly and their children, who often manage the insurance policy, peace of mind can differentiate itself significantly from its competition.

Across the globe, many insurers are working to set themselves apart from the competition to win business. They also want to reduce their exposure to risk. Implementing a connected vehicle insight solution can help them do both. In this example, the connected-car solution helps mitigate some of the risk of writing a policy for an elderly driver. And because this particular insurer is willing to do so, the elder’s family may move the entire family policy to that carrier, especially if there are discounts for multiple policies.

It’s not just the families and insurers of the elderly that benefit from a connected insight system. Policy holders of one European insurer benefit from a connected car app that notifies the carrier in case of an accident so that help can be quickly dispatched. Furthermore, because accurate crash data is immediately available, the insurer can process the claim faster, improving customer satisfaction. The company has also found and recovered stolen cars during the theft simply by noting unusual driving patterns based on the vehicle data.

The next generation of connected-vehicle insights

Automobile telematics, or “black box,” devices have been around for more than 20 years, but most only capture four or five events for the insurer. However, today’s cars can provide a treasure trove of other data through onboard sensors and computers that can capture information about the vehicle and access it in near real time.

With IBM Connected Vehicle Insights, insurers have the ability to really dive into that wealth of vehicle data. They can mine the information in new ways for a very granular understanding of the driver’s behavior. Connected Vehicle Insights provides a real-time decision engine, real-time monitoring and analytics engine, and all the data belongs to the insurer. This solution extends the power of cognitive computing to connected cars by analyzing and providing greater contextual insight from the connected car data.

For example, a typical event measured by a connected-car device is harsh acceleration. Now, a harsh acceleration event is a bad thing in a residential neighborhood. But a harsh acceleration on a highway on ramp is probably a good thing. By understanding the event’s context, an insurer has more accurate information and can gain a much more comprehensive profile of its drivers. IBM’s Connected Vehicle solution also offers real-time weather insights, again providing additional context and further refining an insurer’s insights into its drivers.

Data – the new driver of the insurance industry

With Connected Vehicle Insights, insurers can use analytics to better understand their drivers and the risks associated with them. Any data collected is owned by the insurer and can be further analyzed based on their needs. Data from the vehicles may be combined with other information they have about the driver, like age, gender and driving record. It can also be combined with other third-party information – traffic and weather are common examples.

Using this information, the insurer then creates the risk profile that’s appropriate for their customers, their geography and their culture. The one-size-fits-all profile of a “good” or “bad” driver goes away. Because the type of driver you have in Rome is very different from the driver in Des Moines.

Owning the IoT data provides additional benefits to insurers. For example, the data may reveal new ways to monetize the results. This could lead to new services to their customers, new revenue streams or data-driven business solutions. One European insurer offers real-time risk-prevention services to subscribing customers. It is also beginning to apply the technology to agricultural vehicles that are often driven on roads. This company is creating new pay-as-you drive policy options that charge more if the vehicles are driven during busier times, and less when owners avoid riskier periods.

At IBM we understand that data is the new natural resource. Insurers who embrace data-driven solutions like IoT connected-vehicle devices have the power, right now, to transform their industry and position it for future growth. Data will drive customer engagement, allowing the creation of new revenue-generating services that both satisfy the customer and reduce risk for the insurer.


Global Industry Leader, Automotive and Insurance, IBM Internet of Things.

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