"Hello Dave."

In 1968, director Stanley Kubrick introduced the world to aninteractive, albeit maniacal, talking computer named Hal in "2001:A Space Odyssey." 

Fast forward to 2013, and not only do such computers generallyexist, they are now prevalent in everyday items, including in theiPhone. With "Hello, Siri," science fiction has becomereality. 

Looking through the wormhole, and taking the temperature ofindustry insiders, The Internet of Things is poised to become the next biguniversal technological advance.

IoT
The Internet of Things (IoT) iscommunication among your things and/or by your things to othermachines, devices and data centers. The technology, which hasalready been implemented in a number of industries, usescommunication platforms such as Wi-Fi, tracking tags, chips, barcodes and radio frequency to effectively give a voice toeverything, thereby animating the inanimate.

The need for the IoT is simple: The number of devices connectedto the Internet already exceeds the number of people on earth. Infact, by the year 2020, there will be an estimated 30 billion things connected to theInternet.

IoT is efficient. It reduces Internet traffic by creatingsmaller interactive ecosystems of just your personal things.

Manufacturers already have begun incorporating communicationdevices into their products, thereby linking typical householditems such as HVAC units, appliances, alarm systems and utilitymeters to the IoT.

It is these newly created "smart" links that impact subrogation,causing broad repercussions. Here are four examples:

Water Line Animation
Imagine a typicalloss scenario where a water supply line fails behind a toilet andnobody is home. A minor leak then floods the residence and causesthousands, if not millions, of dollars in damage.

However, some alarm companies already have implemented watercontrol and leak detection packages, which promise to detect leaksas they occur and enable homeowners to shut off the water main fromtheir smartphones. These systems animate waterlines and let theminterface with alarm systems, alarm monitoring stations and thehomeowner.

Water line animation appears to be an ideal risk managementtool, likely reducing the extent of water damage claims. However,what if the leak detection system, remote shut off or even theinsured's smartphone fails? Welcome to a new breed of subrogationdefendants: hardware and software programmers, communicationentities and even smartphone manufacturers.

Moreover, water supply lines often have no markings, having beenmanufactured overseas. Historically, there likely would not bethird parties to pursue. That's no longer the case, with alarmcompanies promising to alert consumers of leaks and enable them tocut off the water supplies, thereby exposing themselves toliability for the failure of another entity's product.

In fact, security companies already are running ads on nationaltelevision promoting safety and security with the ability to shutoff lights, faucets and televisions while also arming securitysystems remotely from a personal smart device.

Smart Cars
Self-drivingcars are no longer Hollywood props like those seen in the1980's television series Knight Rider. Google, Nissan, Audi,Mercedes and Toyota are at the forefront of this technology, withNissan and Toyota targeting 2020 as the year to mass produceself-driving cars for purchase.

The technology behind the self-driving cars uses numeroussensors to detect proximity, acceleration, location and eventraffic patterns for vehicle-to-infrastructure communication.Eventually, this system will include vehicle-to-vehiclecommunication. The result: a car that drives itself.

So what happens when a self-driving car crashes into a buildingor another vehicle? Who is liable—the driver?  Wait, thereis no driver.

Mercedes has partnered with Nokia to generate a 3D map withprecise road data, lane information, traffic signs and trafficlights. So, how about the map programmer who missed a turn or didnot update a newly added street? 

The answer, at the outset, is that subrogation should be pursuedagainst them all: the auto manufacturer, technology programmers andeven the "driver."  Undoubtedly, such a drastic change inthe way we drive will lead to changes in law, insurance premiumsand how we view auto subrogation matters in general.

Read on for insights into how smart farming and smartcities affect subrogation.

Smart Farming
Farmerstend to their crops by considering factors such as temperature,humidity, chemical levels and the impact of rodents and insects,but the methods of monitoring and responding to these core conceptshave evolved.

Farmers, like the rest of us, want to work efficiently and costeffectively. Thus, they are using agriculture-monitoring devices tohandle these tasks and determine when to water, when to cover theircrops and when to till their soils.

So what happens when the soil sitting beneath a crop of pinotnoir grapes in Sonoma, Calif., isn't moist enough to allow thegrapes to reach their optimum sugar level because the monitoringsoftware failed to accurately read the soil moisture level anddirect the sprinklers to actuate? 

How about the farmer in the Midwest who harvests his corn or soyonly to have it rot in transit because the cold storage containermonitoring equipment failed to notify the driver or thetransportation data center of the spike intemperature? 

With the growing role of the IoT, subrogating carriers mustconsider all of these possibilities, from seeding to market, inevaluating whether they have a responsible third party to pursue. 

Smart Cities
A smart city is aninterconnected system of systems. It uses the IoT to provide aplatform for its infrastructure, operations and people to interact.Smart cities use smart grids to improve such areas as energy andutilities, transportation, weather and public safety.

Rio De Janeiro, Honolulu, Miami and others have startedtransitioning their infrastructures to accumulate and process dataat centralized locations in an effort to increase response timesand to identify and respond to problems.

Data taken from sensors, video feeds and other communicationdevices produce real time maps and graphs, which may then be usedto predict problems and try to counteract them in advance.

For instance, weather monitoring systems can forecast heavyrains which, in turn, may allow a smart city to predictcatastrophic events such as flooding and mudslides. The city canthen warn citizens, divert traffic and drainage, shutdown certainareas of the city and dispatch emergency personnel before the eventhappens.

What happens if the predictive software or the infrastructure'sresponse is wrong? Government entities, which traditionally havebeen insulated from liability for unforeseeable acts of God, mayjust open the door for recoveries by turning the key to the cityover to the IoT.

Computers, not people, will be tasked with identifying,assessing and responding to these catastrophic events. Thus, anyfailure of these systems to accurately and promptly do so could bejust what the subrogating carrier ordered.

As the IoT continues to grow, subrogation carriers should notlimit their evaluations to the traditional defendants such asproduct manufacturers, installers and utility companies. Rather,they should consider the potential liability of non-traditionalentities such as data storage entities (the cloud), data analystsand hardware and software programmers when the IoT is involved.

While Hal once infamously said the failure of the ship's antennacould "only be attributable to human error," subrogationprofessionals now know otherwise.