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Unleashing the potential for IoT in Insurance: Matteo Carbone, Founder & Director, IoT Insurance Observatory

Matteo manages an international insurance think tank focused on IoT Insurance. He is internationally recognized as an insurance industry strategist with a specialization on innovation. He is an author and world-renowned authority on InsurTech, ranked amongst the top international InsurTech Influencers and connected to a diverse network of insurance innovators. He speaks globally on the innovation and the benefits of IoT in the insurance industry.

In the lead up to FinTech Connect, we caught up with Matteo in regards to the insurance landscape and unleashing the potential for IoT in insurance.

How do you envisage the future of insurance?

I’m positive about the possibility for incumbents to stay relevant in the lives of their clients and continue to protect their lives. I’m confident – about personal lines and large corporate – about the outlook for the carriers which will be able to continue to use the best available technologies in order to assess manage and transfer risks. Maybe in small commercial and the emerging GIG economy, we will see more disruption.

The ability to innovate in the insurance sector has been remarkably higher than what the people pretend it to be. The German Post Office first experimented with digital insurance sales at the beginning of the 1980s using the Bildschirmtext (data transmitted through the telephone network and the content displayed on the TV screen).

As of today, almost 60 percent of auto insurance coverage is sold online in the UK market, which is more than three times higher than the 17% incidence of e-commerce on all the retail sales in the UK. Outside Europe, the South African insurer Discovery has introduced new ways to improve policyholders’ lives by using connected fitness devices to track behaviors, generate discounts, and deliver incentives for healthy activities. Discovery has been able to replicate this “Vitality” model in almost 20 different countries and different business lines.


In your opinion, what do you feel is the greatest technical innovation to come out of 2018 in relation to Insurtech?

In the insurance sector, nothing happens over-night. Many insurtech solutions are at their infancy stage. As of today, one of the most mature insurtech approaches is telematics, and some best practices have started to extract concrete value from the usage of the telematics data. We have even seen Root – a US insurtech carrier based on a try-before-you-buy telematics app – achieving unicorn status in the last round of financing.

Learn more about Insurtech at FinTech Connect

How do you feel technology, and more specifically IoT, have revolutionized the industry?

Auto insurance telematics – and IoT in the other business lines – has an extraordinary potential to generate value for insurers, policyholders, and even the entire society. Unfortunately, only a few best practices around the world have fully understood how to use this technology within their processes and have started their journey in the right direction.

In the last six years, I had worked with almost 90 insurance players which cumulatively account for more than 80% of the current global insurance IoT policies, and I have discussed the topic in more than 80 conferences. Well, based on this experience, I would claim that the potential of this technology has been largely misunderstood. The common sentences you can hear at conferences about insurance IoT can be defined as “fake news”…we can affirm we are in the age of post-truth even in the insurance sector.

What are the hurdles that the industry needs to overcome to fully embrace IoT?

The key challenges are to go beyond the “fake news” and not to fall in love with a shining device. The strategy has to come first.

The ecosystem is shifting. How do you feel the dynamic will shift over the next 2 years? 5 years?

As of today, large part of the IoT volumes – both on auto and on the other business lines – is on personal lines (on health and life also on employee benefits).  Each of these IoT insurance products which have scaled-up is a closed system or an ecosystem with a clear orchestrator, and this orchestrator is the insurer. These insurance IoT products are sold through the insurers’ distribution channels and are bundles between insurance coverages and IoT based services.

In the next few years, I’m not expecting to see a material shift of the IoT insurance volumes to data exchanges, open platforms or other ecosystems not driven by insurers. These approaches are fascinating and will be in someway part of our future, but we are pretty far from seeing them lead the pack. Maybe, these approaches can fit more with commercial lines rather than personal lines.

If you were to offer 3 key takeaways to insurance companies investigating the use of IoT what would they be?

First, to define the strategic goals you would like to achieve using IoT and consider all the involved stakeholders from customers to distributors, to the different internal functions.

Second, maximize the value creation on the insurance value chain. When you identify what IoT data is necessary to achieve your strategic goals, you have to map all the opportunities to use thix data along the insurance value chain. IoT has a cost and you have to find the way to activate all the value creation opportunities. The more value creation use-cases you can activate on the same data the higher the ROI of your insurance IoT approach.  IoT is about value sharing, so you need to build a value equation able to allocate to each of the stakeholders a part of the value in order to satisfy them.

Third, start with a focus on the customer segment where the value equation is most robust. A systematic measure of the results will allow to activate a constant improvement and to extend the program progressively to other segments, because IoT insurance is a journey.

You can learn more about IoT for Insurance with Matteo in the InsurTech Evolution conference, taking place at FinTech Connect, December 5, ExCeL London. Sign up for Fintech Connect conference tickets here  Use the code FT15 to get 15% off tickets. 


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