The internet of Things is likely to reshape insurance

The Internet of Things is likely to radically reshape the insurance industry, according to the head of Morgan Stanley’s European technology software and services equity-research team.

Adam Wood said this technology major trend was likely to have more of an impact in the products proposed by insurers than either asset managers or bankers.

Wood claims that inexpensive connected sensors have the potential to transform offerings in home, health, industrial and vehicle settings.

“Insurers will be able to collect new data sets and assess risk in completely different ways. In some instances they will be able to act upon a risk in real time," said Wood.

According to Wood this would have significant financial implications for insurers.

“Our model of a ‘digitally born’ insurer suggests that embracing digitisation could significantly reduce both expense and loss ratios,” he adds.

Wood warned that there is a risk, however, that new entrants could now come into the insurance industry with far a more detailed customer insight than is currently available to insurers.

“We see already a lot of innovations showing the way, as well as a few significant moves in this direction. The long-term result could be lower returns as insurers lose control of the customer and become more marginalised providers of capital,” he adds.