Bringing Sensor Data Analytics To Insurance (InsurTech)
A major development in the ever growing insurance and technology industry – known as InsurTech – is in the realm of sensory data analytics. Technology is improving such that a greater and more accurate range of data can be collected with regard to activities that are typically insured – the main and most obvious of these is obviously driving but more increasingly it is being expanded to day-to-day activities which are of interest to health and life insurance firms.
Many companies are now suggesting to individuals that they can get a lower cost of insurance if they install a sensor in their car for a period of time. If it shows that the driver is a careful and safe driver, less likely to have an accident, they will typically be offered a cheaper insurance policy.
Coverbox is one such firm that says it can keep the cost of car insurance down by using telematics. This is a form of data collection using a range of inputs which it collects all while driving and sends via satellite to Coverbox. They suggest that the data also helps drivers stay safe “and legal” on the road. The firm fits a so-called black box in the car, which tracks almost everything the car does from harsh cornering, speeding and aggressive driving maneuvers. It will even send results to your personal email address so you can assess your own driving and improve where necessary. Furthermore, the company points out that it can be a help in the event of an accident as it would show clearly whether you were driving dangerously prior to an incident.
This then can follow on to having an impact on the financial services industry because it feeds into the insurance sector. In theory, people can get better or lower insurance premiums due to more accurate data being collected. Obviously, it could run to a whole range of data and therefore types of insurance. Even life insurance, for example, could be included and this too could rely heavily on more in depth sensory data.
Insurance firms could, for example, request that clients wear health monitors, tracking heart and breath rate and blood pressure so they can build an accurate picture of how healthy you may be and how likely you are to claim on your insurance. A few firms in the life InsurTech space are innovating to find a different approach.
At the Austrian Institute of Technology, they have looked at the ways new sensor technology can be used for a range of things including InsurTech, along with infrastructure protection and eHealth, all of which feed into better insurance technologies. They comment that the reason these technologies can help boost insurance quality is that they result in a “higher detection rate and a lower false alarm rate in the detection of safety and security-critical parameters and events.”
One technology is related to embedding optical solutions for accurate customer identification and to allow for the rapid assessment of safety-related parameters and events. One such technology they support is called smart eye UCOS which allows for accurate and rapid people counting. Not only is it accurate but it is also automatic and says once the hardware is installed, works even in poor light or weather conditions. It is a totally new technology that counts people by noticing changes in brightness and works even when there are many people in the area at the same time. From a data protection standpoint, it is also beneficial as it does not store any data and no pictures are recorded.
Such a technology could be a very valuable tool for the insurance industry as it could really help companies assess the safety of venues or places that have a high flow of people. Knowing how busy or densely populated an area is could help insurance firms more accurately predict the risks associated with big events perhaps or simply day to day issues with a large influx of people into a space or venue – this could help them offer cheaper or perhaps just better underwritten policies.
Another incredibly useful piece of technology for the insurance industry is traffic sensors but this time outside the vehicle, not in it. It optically assesses up to four lanes of traffic on the roads from side or overhead mounted positions. Known as smart eye TDS (traffic data sensor) it is apparently “bio-inspired” and includes a “matrix of autonomous pixel elements that react individually to any changes in brightness.” What it can ultimately tell people is the an accurate display of inbound and outbound traffic, speed of vehicles, the types of vehicles and other data points like the various traffic flow states in certain areas or roads. The applications to the insurance industry again or obvious again, as by gathering such information firms could possibly assess whether they could offer cheaper or more expensive insurance premiums depending on where you regularly drive if they assess certain areas to be riskier than others. Equally such data could indicate things like higher traffic areas having more accidents – if you often drive through such areas, you could be expected to pay a higher premium, possibly.
The applications to the insurance industry again or obvious again, as by gathering such information firms could possibly assess whether they could offer cheaper or more expensive insurance premiums depending on where you regularly drive if they assess certain areas to be riskier than others. Equally such data could indicate things like higher traffic areas having more accidents – if you often drive through such areas, you could be expected to pay a higher premium, possibly.
Ethical issues could soon then come into play with some people being excluded from coverage. Also, people may feel their privacy is being greatly invaded. If such things happen, there may be a push back against people not being able to get insurance and or people not wanting to have their every movement monitored for the benefit of an insurance firm. It is yet to be proven whether sensor analytics even result in more accurate underwriting of insurance policies anyway and whether it is better for firms than traditional practices.
As mentioned above a major new area of exploration in life insurance, for example, is the collection of health related data. Insurance firms are now encouraging policyholders to utilise “wearables” for the collection of data. This has raised several controversies with regard to privacy and data storage however and has been discussed heavily in the media such as in the Guardian newspaper.
Either way, these firms are big business for the insurance industry and could help keep the cost of insurance premiums down. As mentioned in the article, Sonny Vu, CEO of wearable firm, Misfit, says that companies like his try to keep data safe. These products track and store interesting information such as heart rate, exercise levels and sleeping patterns, which could obviously indicate how healthy someone is and whether they are susceptible to illness or likely to need medical treatment in the future. Health and life insurance companies are therefore behind these wearables and welcome more people using them.
One such company based in the United States is Oscar, an insurance firm that claims to be a different kind of insurance company. At one point the company actually gave all of its customers a Misfit fitness tracker and they then received US$1 every time they hit their daily steps goal, encouraging them to stay fitter for longer and therefore less likely to claim on their insurance policy.
Whether or not these companies do more things like this remains to be seen. With questions around data and privacy increasing all the time though, it is possible that there will be a push back from ordinary people that don’t want corporations to profit from their personal information and that they may not trust them to handle it safely, especially with more cyber breaches occurring every year.