Matthew Josefowicz on reports that Aon is in talks to sell its employee benefits outsourcing group.
The recently-launched Argo Risk Tech Solutions looks at common causes and locations of accidents, like slip-and-fall, in the workplace. The idea is to use IoT devices like sensors to communicate to the employees to modify behavior and identify areas of risk like a wet floor, hot soup bowl or items blocking the halls. The IIR article indicates that companies using this technology have seen accidents reduced substantially over a period of time. This positions insurers not just to transfer the cost of risk to them for the cost of premium to an employer, but to actually prevent the risk from ever materializing. This in turn reduces the overall loss experience and allows the premium to be reduced. This approach will be adopted in more and more areas of commercial and personal lines insurance and will be widespread by the 2020s. Over time policy holders that do not deploy these types of sensors will be penalized by being put in different risk pools from those that have the sensors. It will no longer be an option but a requirement. Even further out, the analytics tied to the collection of this data from IoT devices might proactively communicate what to do and when to do it to minimize risk (ex. a commercial truck taking an optimal road to minimize an accident weighed against the time it takes to do the journey). There could be some backlash, however, as people may start to feel the technology is too invasive and not want to provide data or work with a company that does.
The major tech players are all betting that smart home automation and digital assistants will be the next big thing for consumers. Grange is taking advantage of this emerging area with their recent announcement that Amazon’s voice-controlled Alexa can now help users learn about Grange insurance or find local agents. It’s clear that the insurance marketplace has not always adapted quickly to improve the customer experience, so this is a great example of an insurer working to serve consumers in whatever way they prefer. It also demonstrates the necessity for insurers to think to the future when they modernize their back-end systems. Will a new core system support future channels? Over the last five to ten years insurers have poured a lot of time and money into building web-based consumer portals. Those that didn’t build for future flexibility had to start from scratch in order to create mobile-ready sites. Will they have to begin again to leverage voice-based home assistants or some as-of-yet unknown customer interaction? Insurers who are thinking in an omni-channel way will instead be architecting agile back-end systems that can support any number of channels and–just as importantly–can support transfers between channels when necessary.
The potential for wearables in health and life insurance has been hindered over the past few years by lack of standards and slowing adoption by consumers. This week, UnitedHealthcare and Qualcomm announced they have “enhanced and expanded” the employee wellness program UnitedHealthcare Motion. UnitedHealthcare Motion is making progress in wearables use for wellness programs by leveraging the advantages of using the Qualcomm 2net platform, a medical-grade cloud-based infrastructure for medical device applications, with enhanced security and flexibility provided by standardization of end-to-end connectivity for wearables. The ability to quickly integrate in the Fitbit Charge 2, first shipped to consumers in mid-September 2016, shows the advantage of a standard platform that can respond to changing consumer demands and device capabilities. As mentioned in Novarica’s report on “Internet of Things, Wearables and Insurance Customer Experience”, security and standardization as seen with the UnitedHealthcare Motion BYOD capability will enable faster adoption of wearables for use by insurers to improve customer experience.
As more IoT devices go online, the challenge for insurers is how to manage data from various devices and leverage that data to assess risk. In Novarica’s report on “Internet of Things, Wearables, and Insurance Customer Experience” from April 2016, we noted that one of the main challenges is a lack of standards for interoperability and communication between devices and the systems that collect and analyze their data.
This week, Hartford Steam Boiler (HSB), a subsidiary of Munich Re specializing in equipment breakdown insurance, announced a partnership with L&T Infotech (LTI), a global IT services firm with expertise in automation of device data collection through their automation platform, MOSAIC Automation. While the deal focuses on broader system integration and management, there is potential for LTI to support the wide variety of devices and systems that HSB monitors for clients and provide standardization across HSB’s process, platform and application architecture. With LTI’s platform providing data and analytics, HSB can focus on expanding coverage to equipment with a broader set of supported sensors and on better use of the data being collected to reduce costs and enable new capabilities. HSB has shown interest in these capabilities before, investing in Waygum’s mobile app for interacting with IoT sensors last year.
While much attention is put on IoT devices for auto and smart home application, use of IoT devices and analytics for commercial applications has great potential. Most manufacturing plants, commercial office buildings and even solar farms have large numbers of sensors and systems for equipment control and monitoring, but the information is often trapped in proprietary systems with customized interfaces. LTI’s MOSAIC and platforms like it promise to consolidate the data across various interoperability standards and provide analytics that insurers can apply to risk analysis and claims. Insurers may also explore the possibility of providing value-added services to clients to predict equipment failure and have backup solutions in place to reduce downtime. IoT analytic capabilities could enable insurers to evolve from claims analysis to claims prevention, which can benefit clients by reducing the cost of equipment failure.
On this past Friday (10/21), many of you may have noticed problems connecting to Twitter or streaming Spotify and probably know now that the cause was the latest internet attack. The attack was a DDoS (distributed denial of service) attack where thousands of computing devices infected with the Mirai botnet code targeted the Dyn’s internet servers. Dyn is a Domain Name System management services provider used by Spotify, Github and other popular internet sites.
The internet experiences an increasing number of DDoS attacks – some estimates are at over 124,000 per week against enterprise networks. What was different about this attack was the Mirai botnet compromises common Internet of Things (IoT) devices, such as internet-enabled DVR’s (digital video recorders), security webcams and poorly secured internet routers. The basic plan of attack is to use standard administrator accounts and passwords provided by the device manufacturers and rarely changed by the consumer. (By the way, in most cases an easy fix is to reboot the device and change the administrator password.)
Security blogger Bruce Schneier recently wrote the “someone is learning how to take down the Internet”. He and other security experts warn that this could just be the beginning of more frequent and sophisticated attacks that are also larger and more damaging to internet site accessibility.
In Novarica’s report on IoT, Wearables and Customer Service, we mentioned five challenges for consumer adoption – security was an important one: “Adoption depends on building user trust and avoiding potentially hazardous hacking of devices, especially for automobile operation, home security, and drone operation. Security thus far has been the responsibility of device manufacturers, who may neglect it in order to keep prices competitive.”
As carriers begin to consider how to provide IoT and wearables to consumers and use the data, security should remain a concern so that consumer data is better protected along with brand name. Carriers should press device manufacturers to improve IoT security and CIOs should consult with their CISO or security consultants about how to be better prepared for DDOS attacks in the future.
Rob McIsaac on MetLife spinning off its retail unit.
Tom Benton on HSB’s recent acquisition of industrial IoT startup Meshify.
Chuck Ruzicka on the recent autonomous vehicle partnership between Allianz, Toyota, and BMW.
Rob McIsaac on Merrill Lynch cutting commissions for IRAs in order to comply with the “client best interest” provision of the DOL ruling.
Mitch Wein on the potential for increased federal oversight of state workers’ compensation in light of a recent DOL report.
As Internet of Things (IoT) devices and data become increasingly important for smart homes, smart buildings and smart facilities, insurers are considering how to leverage IoT for underwriting, loss prevention and claims. However, they face several challenges, among them the lack of standards for interfacing with IoT devices and platforms to take in the data and integrating the large volumes of data into analytics platforms to leverage the data. Hartford Steam Boiler (HSB) remains on the leading edge of IoT through their acquisition of Meshify this week, along with their investment in IoT startup Waygum last year. Meshify provides a cloud-based platform that “makes any device smart” along with tools for real-time monitoring, alerting and access to information through mobile applications. HSB and parent Munich Re consider the acquisition as a strengthening of their technical capabilities for providing innovation to their customers. Meshify’s capabilities will help HSB’s customers collect important data for risk reduction, but should also enable HSB to go beyond a value-added service for customers to better analyzing customer risk for underwriting and product pricing.