Redefining Risk Control Part 3: Harnessing Real-Time Insights for Risk Control with IoT

Internet of Things (IoT) technology is transforming commercial insurance by extending risk control to smaller and larger portfolios. Simple sensors tackle specific risks for smaller clients, while combining sensor data creates 'risk digital twins' for larger risks, offering real-time insights. This approach revolutionizes risk assessment, lowers costs, and enables tailored risk mitigation plans, enhancing commercial insurance.

Risk control has historically been limited to the large and complex risks in an insurer’s portfolio due to the costs associated with providing these services. However, advances in IoT technology are breaking down these conventional barriers, thereby expanding the scope of loss control to a broader spectrum of the commercial insurer’s portfolio. This expansion is manifesting in two key areas of the portfolio:

Small and medium sized risks - single sensor solutions

For smaller risks, insurers should look to “single sensor solutions” where they offer clients simple IoT sensors that address the most loss-causing use cases. Providing these to clients as “opt-in” services allows insurers to provide value-adding loss control services without the need for traditional risk engineering services. These sensors come in many different types depending on the risk/peril to protect against and can often be “self-installed” or installed by the sensor vendor to help manage installation costs. Solutions include:

  • Water sensors for mitigating escape of water claims or claims due to flooding
  • Telematics and driver monitoring for commercial fleets
  • Wearables and proximity monitors for increasing workforce safety around heavy machinery
  • Condition sensors for goods in transit, including measuring for temperature variations and impact/damage
  • Proximity monitors/motion sensors for protection against criminal damage or theft
  • Computer vision for detection of potential hazards to protect against potential liability risks

The key to success with these solutions hinges on positioning these as an additional added service provided by the insurer, setting them aside from competitors while also increasing customer “stickiness.” The cost should be shared or wholly born by the insurer to secure client buy-in, and to break the client-insurer data sharing barrier that is often the downfall of these initiatives.

Large and complex risks – digital twins

There is also the section of the portfolio falling just below the threshold for traditional risk controlling. Here, IoT can help a risk engineer assess risks and provide recommendations without the need for full site visits. Often these risks will require a combination of many different types of sensor solutions, and clients may have many of these in place already, such as building maintenance systems or IoT enabled industrial machinery. By combining the data from these sensors, insurers can start to build up “risk digital twins” and get valuable insights into asset health and customer risk behaviour. Not only can this reduce the cost of risk control, it also provides a “real-time” view of risk which provides additional insights than only performing one-off on-site assessments.

Since the complexity of the insured objects is larger, so are the number of IoT devices required to monitor these. It is important that insurers identify the datapoints which are key risk indicators and can access and analyse this data. Partnering with larger IoT platform providers such as large OEMs is one way to gain the knowledge required to turn raw sensor data into risk related insights. As is having a risk control team that understands both the complex risks as well as the different sensor solutions and how they should be best used to mitigate risk.

Redefining risk control article series

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🔍 What's covered in the series:

Part 1: Technology's Role in Bringing Risk Control to Your Whole Portfolio

Part 2: Transforming Risk Control Services Through Remote Assessment

Part 3: Harnessing Real-Time Insights for Risk Control with IoT

Part 4: Unlocking Risk Control Insights With the Power of Predictive Analytics

Part 5: Building Foundations for the Future with a Risk Object Management System

Join us in this exploration of cutting-edge risk control methodologies, technological innovations, and forward-thinking strategies that not only enhance profitability but also position commercial insurance companies at the forefront of proactive and data-centric risk management. Download the entire article series now.

The impact

By analysing the data from these sensors and liaising with risk management teams at the client, recommendations and risk mitigation plans can be provided to the client at relatively low cost and at a higher frequency than traditional risk engineering. In addition, outlier risks can be identified from client portfolios, meaning that additional risk engineering services can be provided to this specific risk. These combined allow a much larger proportion of the portfolio to benefit from risk control services and greatly increase the risk control applied to the portfolio.

While bringing all of this data to the fingertips of the risk engineer presents challenges, the potential to revolutionise commercial insurance and drive unprecedented value is within reach.

To delve deeper into risk control, download the complete article series in a single PDF format. Reach out to us if you seek tailored solutions matching your needs.

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