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Insurtech Meets IoT – How 20 Billion Connected Devices Are Opening Up New Business Areas for the Insurance Industry

Robert Aderan


The insurtech community has identified a massive business opportunity in the digital space. Whereas the focus so far has been on the digital transformation of existing insurance offers, completely new business opportunities now emerge with the explosive growth of the Internet of Things. From smart home to e-health, established players and innovative insurtech start-ups are entering the IoT market on a large scale.



We hinted at it in our last blog post: The number of digital companions guiding us in our daily lives is ever increasing. Connected electronic devices control our smart homes, drones document our sailing trips, fitness trackers transfer transaction data to our health insurance and smart glasses provide a second augmented layer over our surroundings. Up to 14 billion of these Consumer IoT devices should be in use in just three years from now, not to mention 6 billion smartphones as well. So we are talking about a total of 20 billion connected devices that accompany us around the clock and on which we are becoming increasingly dependent.


Using IoT Data to Manage and Limit Risks


This opens up unexpected business areas for the insurance sector. The insurtech scene is working urgently on how to manage and effectively limit risks with the help of IoT devices. Networking over an ever-increasing number of sensors leads to huge quantities of data from which important information and impulses can be derived. The question of to which extent insurance clients are willing to release their own data is controversial. Insurtech start-ups, however, are trying to circumvent this issue by making the newly designed offers so attractive that customers wouldn’t even think of refusing to exchange their data.


The Silicon Valley start-up Trov is such a provider that wants to better recognize and reduce risks by intensifying networking with its customers instead of just compensating them in the event of damage, which is common practice in the insurance industry. Trov provides on-demand insurance that allows customers to insure electronic devices such as cameras and computers in specific situations and for a limited time only. The whole thing is implemented via an app, on which Trov can activate or deactivate their insurance cover using finger swipe.


Tell Me What You’re Doing and I’ll Tell You What Your Insurance Costs


What on the one hand sounds like an extremely convenient offer requires, on the other hand, complete transparency through the exchange of data. The insurer can only calculate a plausible price for such on-demand insurance if all the important information about the customer and the product to be insured is available. The situation is similar for car insurance companies based on telemetric information. Sensors integrated into the car send a series of speed and acceleration data to the insurer to assess the risk level of the driving.


The driver also has access to these evaluations and can adapt his driving style. The assumption is that the actual risk of an accident is reduced by reciprocal transparency, which the insurer honors by reducing the insurance premium. However, insurers can further reduce the risk by combining the possibilities of the Internet of Things with artificial intelligence. If the telematics sensors register that a driver is often travelling in hazardous places, the insurer’s artificial intelligence can point out other routes to the driver by accessing the navigation system.


At the Interface of IoT, Data Exchange and Artificial Intelligence


While many questions remain unanswered, especially surrounding the topic of data protection, the trend towards connected insurance offers continues unabated. Accenture analyzed the criteria used by investors when investing in insurtech start-ups. In the past year, 70 percent of the total value was invested in companies, specialized in IoT, data exchange and artificial intelligence. Ideas and capital are sufficiently available. Now it is all about developing practical insurance offers as soon as possible that deliver tangible benefits to insurance customers.


B2X offers a turnkey customer care solution for the insurtech industry. With our network of 500 service partners in 140 countries, we support insurers in their rapid expansion into new markets and ensure the best possible service experience that convinces and satisfies customers.


Summary: In the past year, investors have invested in 500 insurtech start-ups worldwide. The focus was on innovative insurance approaches, which specialize in the use of the Internet of Things as well as artificial intelligence. As a result, the entire insurance industry hopes for completely new business models and an upturn in demand, especially among young insurance customers, for whom traditional offers are no longer appealing. How do you rate the development of the insurtech community? Contact us today and don’t forget to follow B2X on LinkedIn!


Robert Aderan is the Head of InsurTech Practice at B2X.

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