The insurance industry has long been reactive—assessing risks, processing claims, and managing policies based on historical data. However, with the rise of IoT and parametric data, the industry has a unique opportunity to shift towards a more predictive and preventative approach.
In the latest episode of our INFUSE webinar series, moderator Tony Tarquini, Founder and CEO of 5189 Limited, led an insightful discussion with industry experts Hélène Stanway, Independent Advisor and Consultant, President of SENSE Consortium; Charlie Stenger, CEO of GST Specialty; and Arijana Antunovic, Parametric Business Developer at Global Parametrics.
The Current State of IoT in Insurance
Despite IoT’s long-standing presence in industries like telematics, its adoption in insurance remains slow. Hélène noted that while commercial property owners have deployed sensors to measure heat, temperature, and air quality, insurers have yet to fully leverage this data for underwriting and risk management. The industry is beginning to recognize the potential for predictive analytics in claims processing and loss prevention, but hesitancy persists.
Arijana highlighted the growing credibility of parametric data in real-time decision-making, particularly with satellite imagery and sensors influencing pricing and policy structuring. However, its application in commercial property insurance remains underutilised, likely due to the industry’s cautious approach to innovation.
Cyber Risk and IoT Data Utilization
Charlie Stenger provided a cyber risk perspective, emphasising how insurers are increasingly using external scanning tools to assess corporate vulnerabilities. These tools detect open remote desktop protocols and other potential breaches, enabling insurers to notify clients before issues escalate. However, while these advancements are beneficial, cyber threats evolve rapidly, requiring continuous adaptation.
Despite these advancements, industry skepticism remains. Arijana noted that both clients and brokers require more education on IoT data’s potential, while Hélène pointed out that recent research identified 21 adoption blockers, including concerns over data reliability, security, and resistance to change.
Barriers to Adoption and the Path Forward
One of the main concerns surrounding IoT data is its reliability. Arijana reassured the audience that parametric data is globally recognized, publicly available, and encrypted for security. However, privacy concerns and third-party data access remain contentious issues. CISO’s worry about cybersecurity threats targeting insurers, but enhanced transparency and audit capabilities can help alleviate these fears.
To accelerate IoT data adoption, the industry must focus on education, experimentation, and client engagement. Hélène stressed the importance of shifting from traditional insurance products to a broader risk management approach. Arijana added that regulators could play a critical role by implementing clear guidelines and eliminating grey areas in IoT-based risk transfer solutions.
Is The Industry Ready?
Hélène emphasized that scaling IoT adoption hinges on integrating data into pricing algorithms and underwriting models. The industry must move beyond conventional frameworks and embrace technology-driven insights to enhance risk assessment.
Final Takeaways from the Panel
- Charlie Stenger: Cyber risks will continue evolving rapidly. The most forward-thinking clients who embrace IoT and risk mitigation tools will benefit from lower premiums and reduced risk exposure.
- Arijana Antunovic: Alternative risk transfer methods are key to the future. Clients should proactively explore these options to improve their claims experience and overall risk management.
- Hélène Stanway: “The insurance product is dead. Long live insurance risk management with the insurance product.”
Keen to learn more? You can watch a recording of the webinar here.