The game-changing impact of IoT
Insurance is one of the last industries to face digital disruption, says Aviva group CIO Monique Shivanandan, with the Internet of Things about to dramatically transform the sector.
New digitally driven business models are forcing whole industries to rethink their futures. Airbnb’s impact on the hotel industry; Uber’s disruption of taxi services in major cities; the emergence of self-driving cars that present a serious challenge to the automotive sector — the examples are all to clear to see.
But such dramatic shifts are not taking place in isolation. They will inevitably have a knock-on effect on ancillary sectors — something that the digital chiefs at insurance companies are only too aware of.
“Insurance feels like one of the later industries to face disruption,” says Monique Shivanandan, group CIO at London-headquartered Aviva. As a former CTO at Capital One and BT Retail, she has seen waves of disruption wash over financial services and telecoms. But as it hits the insurance sector she believes the transformation is going to be faster and have a greater impactful than in either of those cases.
“The insurance industry will be incredibly disrupted,” she believes, but the opportunities to reset the competitive landscape are “immense.”
“The creative minds that are building the driverless car or changing the whole hotel industry are changing everything in insurance,” she says. The way people need to be insured will change — as will the way in which insurance companies such as Aviva interact within the ecosystems that surround property, health, vehicles and much more.
Shivananadan cites the example of young people in US cities such as San Francisco, many of whom are already choosing to rely on “pooling Ubers” to get around rather than buying a car. That creates a new set of ground rules for insurance, she says.
To ensure it can lead in this new world, Aviva has been quick to put digital at the heart of its strategic agenda. It has been supporting that drive for innovation through initiatives such its Digital Garages in London’s tech ground zero, Shoreditch, and in the financial technology hotbed of Singapore.
“Disruption is definitely going to happen because the next generation of insurance buyers is not going to want to work in the traditional way. We understand where the technology’s going, we understand where our consumers want to be and we are participating in, and partnering within, those ecosystems to provide our customers with the best solutions for their everyday lives,” says Shivanandan.
The single biggest technological influence on that disruption is going to come from the Internet of Things, believes Shivanandan. As more and more physical objects and analog products are brought online, the collective impact of the Internet of Things will be “massive for insurance” — much more so than in other industries, she says.
“Devices in the home that monitor people coming in and out, that check water pressure and automatically turn off your water if you have a leak, that check whether your medicines have been taken from the refrigerator, all those things really are going to change how we work,” she says. “We can leverage the technology to pull those together in a way that really helps protect our customers.”
One area where disruption is already under way is in the personalization of car insurance. Aviva Drive is a free app that monitors customer‘s driving skills. Once they’ve driven 200 miles, they get an individual driving score out of 10. Safer drivers who score 7.1 or more can save an average of £150 ($220) on Aviva comprehensive car insurance. The app has been downloaded 400,000 times and registered almost 30 million miles of customers’ driving since it was launched in 2012.
“Our proposition, our differentiation [in the future] for both corporate and consumer customers, says Shivanandan, “is really going to be around how we incorporate and build a bundle that leverages Internet of Things capabilities — that may prevent a robbery or a fire, or help recover more quickly when something like that does happen.” Digitalization is even changing the standing of insurance as a tech career destination — something that has even surprised Shivanandan: “It’s amazing; it’s dramatic; it changes every day. It’s going to be fascinating to be part of an industry revolution.
• Photography: Greg Funnell