Internet of Things Explained

It’s predicted more than 64 billion Internet of Things (IoT) devices will be installed around the world by 2026, with companies and consumers spending nearly $15 trillion on IoT devices, solutions, and supporting systems¹.

Our Allianz expert James Tucker, Transformational Propositions Manager and Shanna Serrano, Transformational Propositions Consultant will explore what the Internet of Things is and how it can be utilised by businesses.

What is the Internet of Things?

The Internet of Things (or better known as IoT) refers to devices connected to the internet or other networks. These devices can collect and communicate huge volumes of data which can be used for real-time analysis and automatic reactions.

Think beyond your laptop and smartphone, and think about the smart thermostat or speaker in your home, the lift in your office, or the intelligent camera at the airport. As IoT develops more and more devices will join the list.

Why is IoT becoming a popular topic and how will it affect individuals and businesses?

The Internet of Things is becoming a popular topic because it’s so prolific yet often without us even being aware. At a tremendous rate, more and more everyday items are becoming connected devices and as businesses are becoming increasingly aware of the value of data, the opportunities and challenges IoT technology brings can’t be ignored.

What are the benefits of IoT?

There are different benefits of IoT dependent on the sector, however, broadly speaking the main benefits are:

Businesses can get information in real-time to gain insight into their productivity and performance to make changes for improved efficiency.
IoT can allow businesses new ways to understand customers through gaining further insight into behaviour and demand.
Using insight from customer touchpoints can provide a multi-dimensional view of the customer’s experience, enabling improvements to be made and increased personalisation.
Using connected smart sensors means a business can understand their working environment better and monitor potential hazards.

What are the risks with IoT?

The biggest risk in IoT technology is security - the constant connectivity and data sharing opens up new risks for information to be compromised.

In the 2020 Allianz Risk Barometer, the risk of a cyber incident (such as cybercrime or data breach) was ranked the number one risk to businesses.

There are many groups that exist to exploit data which is illegally acquired for malicious purposes.

How will the insurance industry be affected by IoT now and in the future?

At present, insurers have mainly used IoT capabilities to understand customer behaviour, to enhance customer interactions and to improve operational tasks such as claims processing. Telematics has been the most prevalent insurance use case by far.

As technology develops, we’re seeing more ways it can disrupt current approaches to measuring and managing risk. There’s capability to access real-time customer specific data – so risk can be understood at a more granular level. In the future this will reshape the way insurers assess price and risk, as well as determine how new products and services are brought to market.

How can businesses increase their awareness and understanding of IoT?

If a business wants to understand commercial IoT and how it could impact their business they can find lots of information available online. Brokers and businesses can read great whitepapers and industry cases from reliable and recognised sources such as McKinsey, Gartner, The World Economic Forum and many more.

Another way to understand if IoT could be beneficial is to pin point the business challenges and opportunities you may face. You can read through case studies from IoT suppliers or speak to them directly.

Authors

James Tucker
Transformational Propositions Manager
Allianz UK

As Transformational Propositions Manager, my job is to help with the development of new disruptive propositions for our customers at Allianz. I provide both strategic and technological input as well as, manage the various projects and proof of concepts we are running.

Shanna Serrano
Transformational Propositions Consultant
Allianz UK

As a Transformational Propositions Consultant, I explore and prototype new value propositions in order to make step changes in market. This means investigating opportunities and challenges across our business by delving into customers’ needs and problems to find solutions. One of my specialisation areas is the Internet of Things in the commercial setting and its application.

Footnotes:

1 https://www.businessinsider.com/iot-business-opportunities-models?r=US&IR=T

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Commentary and guidance in this article are provided for information purposes only and are not intended to amount to advice on which reliance should be placed. Readers should seek further advice when dealing with their individual and particular situations. Allianz Insurance plc shall have no liability for any action taken as a result of and in reliance on the information contained in this article.