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Managing data. The Internet of Things is collecting vast amounts of data that insurers must now convert into usable information to provide a better picture of claims risks. (Photo: Shutterstock)

The Internet of Things (IoT) is changing the nature of risk assessment in real time. As more and more devices begin transmitting information about their locations, movements and patterns of use, a wealth of data is accumulating about the environmental and human factors that contribute to the likelihood of a loss event taking place. It’s an embarrassment of riches from an actuarial standpoint, but the data is proliferating so rapidly, and from so many sources, that one could be forgiven for feeling overwhelmed by the challenge of putting it all to good use.

Perhaps that is why, according to a 2016 EY survey of C-level executives across multiple industries, only 36% of respondents from the insurance industry claimed that their companies could use insights from new data sources to boost customer value. Of the seven industries EY surveyed, the insurance sector ranked dead last on this question. How can that be? Surely the ability to use real information rather than calculated probability to determine premiums, prevent fraud and settle claims faster must be an advantage.

Related:  Scaling hurdles on the path to insurance digital transformation

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