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The world is becoming increasingly connected. From smart homes and wearables to telematics-enabled vehicles and sensor-equipped smart cities, the integration of IoT is generating an unprecedented flow of real-time data. For insurers, this interconnected ecosystem presents a game-changing opportunity: moving from retrospective risk assessment to proactive risk prevention.

Traditional risk models - largely based on historical data -  are being outpaced by IoT-driven, real-time insights solutions.  From telematics in vehicles to smart sensors in homes and wearables in healthcare, IoT is enabling insurers to adopt a “predict and prevent” approach, reducing risk exposure while enhancing the customer experience through proactive, data-driven insights. This transformation improves accuracy, cost efficiency, and customer engagement, enabling insurers to offer personalized policies that reflect individual behaviors. With real-time insights, they can tailor coverage dynamically, aligning premiums with actual risk profiles and risk exposure. 

Yet IoT’s impact doesn’t stop at risk assessment and underwriting, it’s also transforming claims management. Traditional claims processes, often slow and reliant on manual verification, are being replaced by real-time, automated solutions that accelerate resolution and enhance accuracy. Connected devices provide instant, verifiable data at the moment of an incident, reducing disputes, minimizing delays, and streamlining payouts. At the same time, IoT-powered analytics help detect anomalies and flag potential fraud, protecting insurers from costly losses. The result? Faster settlements, reduced operational costs, and a seamless claims experience that meets the expectations of today’s digital-first policyholders.

IoT adoption in insurance - rapid market expansion

The adoption of IoT in insurance is rapidly gaining momentum, driving both market growth and operational transformation.The global IoT insurance market is experiencing exponential growth, projected to expand from $100.02 billion in 2024 to $153.89 billion in 2025, at a compound annual growth rate (CAGR) of 53.9%.

The IoT insurance market is on track for rapid expansion, expected to surge to $983.02 billion by 2029 with a staggering CAGR of 59.0%.

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This surge is driven by insurers' increasing reliance on IoT data for more precise risk evaluation, dynamic pricing, and proactive risk mitigation - enabling tailored premium structures, improved claims efficiency, and enhanced customer experiences.

Expanding IoT applications across insurance business lines

IoT technology is revolutionizing various insurance domains. Key applications include:

1. Mobility Insurance: Telematics devices monitor driving patterns, enabling usage-based insurance models that offer personalized premiums and encourage safer driving habits.
   
   1. The McKinsey Center for Future Mobility projects that by 2025, connected cars will make up 90% of all new vehicle sales in the United States.
   2. According to Zurich Insurance, integrating telematics with fleet management systems has the potential to lower claim incidents by up to 88% and reduce damage costs by approximately 78%.
2. Home Insurance: Smart home sensors detect risks such as fires, water leaks, or break-ins, allowing insurers to prevent losses and reduce claims.
   
   1. HSB (Hartford Steam Boiler, an inspection and insurance company under Munich Re) partnered with Whisker Labs to create Ting, a groundbreaking 24/7 smart sensor that detects early signs of electrical fires in homes, significantly enhancing fire safety.
   2. Hippo offers innovative IoT-driven home insurance and employs a proactive, technology-driven approach that is aligning its expected loss ratios with long-term targets, leading to fewer and less severe claims and enhanced overall financial stability.

3. Life and Health Insurance: Wearable health monitors provide continuous data on vital signs, allowing insurers to offer wellness programs and dynamic policy adjustments based on real-time health information.
   
   1. According to Forbes, some insurance companies have been able to reduce premiums by as much as 25% for policyholders who use IoT devices. This discount is a clear financial incentive, encouraging policyholders to adopt and maintain behaviors that reduce the likelihood of accidents or claims.
   2. According to a 2023 study by Bain and Company, 59% of consumers around the world expect life insurers to offer rewards for maintaining a healthy lifestyle.

4. Commercial Property and Equipment Insurance: IoT sensors monitor properties, machinery, and equipment, enabling insurers to assess structural integrity, detect maintenance needs, and prevent failures - minimizing downtime, improving risk evaluation, and enhancing operational efficiency.
   
   1. Samotics, a company that leverages sensor and operational data to manage systems and schedule targeted inspections, claims that up to 90% of developing faults can be detected as early as five months before they lead to failure. This proactive detection allows for timely maintenance, reducing the risk of unplanned downtime. For insurers, this proactive detection enhances risk assessment and loss prevention by minimizing the frequency and severity of claims due to unexpected equipment failures.

5. Cargo Insurance: IoT sensors and smart tags monitor shipping containers and transported goods, enabling insurers to track environmental conditions, and verify cargo integrity - reducing operational risks, facilitating timely maintenance, and enhancing overall risk evaluation.
   
   1. The lack of tracking and security inspections for 99.9% of shipping containers contributes to an estimated $50 billion in annual cargo theft and related losses.
   2. AXA XL leverages Arviem’s real-time cargo monitoring data to provide data-driven marine risk consulting, helping to reduce and mitigate risks.
6. Agricultural Insurance: IoT devices continuously monitor key parameters - ranging from soil moisture and weather patterns to soil health, irrigation levels, and crop growth - by collecting real-time data from fields and livestock. This wealth of information not only empowers farmers to make more informed, timely decisions about resource management but also allows insurers to craft dynamic policies that accurately reflect current agricultural risks.
   
   1. Research indicates that AI-powered irrigation management using soil moisture sensors can cut water usage by as much as 25% while sustaining or even boosting crop yields. This advancement also has significant implications for agricultural insurance, as insurers can leverage the more accurate, real-time data to better assess risks and tailor coverage for farmers. Moreover, improved irrigation and crop performance reduce the likelihood of losses from drought stress or water-related issues, meaning fewer crop insurance claims.

7. Pet Insurance: Wearable devices for pets track activity levels and health indicators, enabling insurers to offer customized policies based on an individual pet's health profile.
   
   1. Insurers are partnering with pet tech companies to offer discounts on wearable devices like activity trackers. Currently, 10.9% of dog insurance policyholders use these devices to monitor their pets’ fitness and activity, and another 51.7% are open to trying them.

The broad applicability of IoT in insurance makes it a valuable tool for insurers across diverse business lines, enabling more precise risk assessment, proactive loss prevention, and enhanced operational efficiency. Whether in auto, property, health, or commercial insurance, IoT-driven insights help insurers develop more dynamic policies, streamline claims processes, and improve customer engagement, ensuring its relevance regardless of their specific focus.

SOSA: Integrating IoT into your strategic vision

The insurance industry is evolving, and IoT is changing how risk is assessed, claims are managed, and customer relationships are built. Telematics, smart home sensors, and wearables provide real-time data that helps insurers price risk more accurately, prevent losses, and improve engagement. But adopting IoT must be strategic—aligned with business goals and seamlessly integrated into operations.

SOSA helps insurers source, validate, and implement IoT solutions that drive measurable impact. With a global network and deep industry expertise, we identify the right technologies and ensure they fit within insurers’ workflows and long-term strategy. From pilot programs to full deployment, we provide the tools to turn IoT into a business advantage.

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