The Internet of Things is changing the customer experience, according to Kevin Daley, chief business architect at IBM. Daley, who looks at existing and future technologies and has been with IBM for the past 15 years, spoke recently at Safelite Solutions’ Annual Customer Experience Conference held in Chandler, Ariz.
There are three steps to IoT applications:
- Capturing data from the object.
- Aggregating the information.
- Transmitting and acting on that information.
IoT applications must be connected, not just interconnected, Daley said. In insurance, the data provides information about the location, condition and the underlying risk. Homes, cars and even people can be monitored.
He explained that consumers are driving technology. Transformation is happening as a result of everything from wearables to digital business, connected vehicles and robotic logistics. Examples of IoT objects include smartphones and cars, though Daley said that wearables adoption is massive compared to all other IoT devices.
Because the technology is interconnected, there has been a shift in how insurance is being purchased. Direct insurance is being driven through aggregators that are disrupting the pricing and structure of standard ways of obtaining insurance. There has been a source shift to guru and intelligent systems that can understand context, predict change and optimize for future events, said Daley.
All of this technology creates massive amounts of big data which reveals an increasing need for telematics expertise in order to keep track of and make sense of it, said Daley.
According to a 2014 report on IoT and property/casualty industry by Celent, insurers will benefit from the data through reduced losses.
“From an insurance perspective, what is new and different and critically important about this data is that it can provide a much more accurate picture of the exposures, hazards, and risks of what is being insured,” said Donald Light, director of Celent’s Americas Property/Casualty Practice and author of the report.
Key elements of data include velocity, variety and veracity. Daley explained that veracity, in particular, can be problematic. For example, the location element is only as good as the GPS tracking it. There are 24 GPS satellites globally and only three are needed to triangulate location. But good location accuracy occurs with five GPS satellites, said Daley, who noted that the greatest number of satellites one could get for a location triangulation is 12. Besides the number of satellites, inaccurate location data can result from IPhone rotation, delay or static noise.
As a result of the IoT, consumers are more connected and empowered. In addition, competition is coming from new and different areas, said Daley, transforming operations and business models.
All of this results in an emergence of an individual-centered economy, he said, inspiring customer service innovation. He cited USAA as an example. The insurer is partnering with other companies to provide service to customers throughout the auto life cycle – during the purchase, finance, insurance, maintenance and selling stages.
Consumers are in the driver’s seat. Brand differentiation is more about the consumer and less about product, said Daley.
IoT offers insurers the ability to provide policyholders a connected consumer lifestyle while simultaneously detecting risks, he explained. It combines policyholder values – safety, security, economics, comfort and convenience. For example, a new IoT offering on the horizon is a geo-fence that will let parents decide the specific region teens will be allowed to be in.