The insurance industry is at a crossroads. A new generation ofconsumers – the first to grow up in the digital era – is ready toexamine insurance providers and decide which best fits their needs.These consumers have come to expect daily interactions withconnected technology, and are eager to implement a more connectedlifestyle in both their personal and professional lives.

The exponentially growing market surrounding the "Internet ofThings" is poised to merge with the insurance marketplace, andinsurers that prepare to support the concurrent technology growingalongside this lifestyle will help to future-proof theirbusiness.

Customer service and rise of the digitalconsumer

There is an emerging demographic gap between the way insurancepolicies are created, delivered and serviced and the sub-30generation that companies need to nurture if they are to have afinancial future. This new generation is familiar with the conceptof receiving personalized service derived through personal data,and it expects direct and seamless communication. This rise of thedigital consumer has brought along with it an expectation that acompany make things as smooth and convenient as possible, no matterthe industry.

This means that the way insurance has been packaged andpresented in the past is no longer enough. Many policies have a"one size fits all" structure, but today's customers expect ahigher standard of customization and demand to be treated asindividuals.

Connected technology is becoming ubiquitous and our homes, carsand health trackers will all collect data in the very near futureif they are not already. This data can help insurance providersdevelop more personalized policies that better fit actual lifestyleand risk assessment. By understanding a customer better, insuranceproviders can add value through proactive relationships, policychange recommendations or the addition of new products orservices.

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From reactive to proactive

By leveraging closer and more personal communication betweenproviders and consumers, the "Internet of Things" has the potentialto change the way an entire generation views insurance.

Leading insurance companies have already built up an amount oftrust; the most successful companies operate on the presumptionthat consumers can trust them in a time of crisis. But what happenswhen the connected lifestyle allows insurance providers to alsoprovide proactive assistance?

In this new role, insurers may take the title of protectors,offering up automatic claims as – or even before – problems arise.For example, the placing of sensors around a home withcommunication capabilities built into the cloud can mitigate boththe number of claims and the average payout per claim.

If a water sensor in a basement goes off, alerting not only theconsumer but the insurer, the consumer could take action to preventfurther damage, and the insurer could already start filing a claimas well as send over a service worker to help fix the problem. Byhelping to bring attention to an issue immediately, this not onlygives greater value to a consumer by protecting their assets, butalso reduces cost internally to insurers.

Industry convergence and ecosystemmodel

This increased communication will not only provide a greaterbridge to interact with traditional customers, but also with otherbusinesses and verticals that also have incentive to engage theseconsumers.

In the future, the insurance industry will become moreecosystem-based, because the products we own and the services wereceive are all going to be connected. The car will connect to thehome, energy consumption and health management will managed throughcommon applications and service providers will all reside on sharedplatforms that manage smart data.

As a result, insurance companies will need to evolve in tandem.Understanding the interrelationships between formerly separatepolicies will directly inform how insurance companies create anddeliver coverage in this new connected future.

Insurers will have the potential to construct partnershipsbetween platforms, data sectors and other industries, opening upinsurance to act as a conduit that brings services together. Thesenew bundles offer increased avenues for ongoing revenue streams.We're already seeing the first stirrings of this trend, with healthinsurance companies teaming up with health trackers to measurefitness as well as vehicle manufacturers working with car insuranceprograms to lower costs to consumers and reward safer driving withless accidents.

[Read related:The connected car—from threat to opportunity]

For consumers, this convergence will allow for a more efficientand streamlined services. In many ways, how consumers interact withtheir service providers may parallel how consumers currentlyunderstand their connected home–through a centralized homeautomation hub.

Today, the most convenient way for people to interact with allof their connected devices is by being able to access all of themin one spot, usually through phones, tablets, web browsers or smartTVs. In the same way, providers will be able to deliver coveragefor home, car and even health all from the same package, increasingtheir own revenue and making it more convenient for consumers tomanage them all from one place.

Staying Ahead of the Curve

In the near future, the "Internet of Things" will enable smarterunderwriting, greater flexibility to manage all policies at thesame time and the opportunity to not only interact with morepotential business partners, but to engage more proactively withthe consumer.

Insurance companies can get ahead of the curve by offering theircustomers personalized smart home solutions for mitigating risk andenhancing customer relations. There are several challenges to befaced, including customer awareness and security concerns, but thelandscape is rapidly changing. Today's insurance companies whichrecognize both the speed at which the "Internet of Things" isdeveloping and the massive potential within the sector will seevery advantageous returns.