Asia-Pacific to spearhead growth of IoT insurance market
A report has placed Asia-Pacific at the forefront of the multi-billion-dollar Internet of Things (IoT) insurance market.
According to market research firm Markets and Markets, the IoT will be worth more than $42bn by 2022, growing dramatically at a compound annual growth rate of 65.89%.
The most dramatic growth will be in Asia-Pacific due to “the increasing urbanisation and modernisation in this region”, states the report, titled: IoT Insurance Market – Global Forecast to 2022.
“The growing adoption of IoT devices such as smartphones, drones and WiFi dongles, among others in the Asia-Pacific region, has increased the demand for IoT insurance in the region,” the report notes.
A critical catalyst for the growth of IoT insurance is the data provided by IoT-enabled devices, giving insurers important information that can be used to reduce risks and manage claims, reveals the report.
Such data could prove especially useful for personal lines such as motor and health insurance. Many auto insurers are already offering usage-based insurance that relies on IoT-based devices such as global positioning systems and in-vehicle sensors to collect data such as speed, acceleration and distance travelled, which can subsequently provide more accurate underwriting, reduce fraud and accelerate the claims process.
The report also states that the technology can be used to encourage better driving behaviour from insureds and reduce their premiums accordingly.
The report categorises the global market for IoT insurance by insurance type, insurance application and region.
Unsurprisingly, much of the IoT insurance market is currently concentrated on the automotive sector. But the way that the IoT can be used with mobile phones has also opened the possibility of policies being offered by non-insurers.
In February, mobile operator O2 launched O2 Drive, which it claims is the first car insurance service from a mobile operator. The service uses a telematics device installed in the car, called Box on Board, to collate relevant data on driving behavior.
But it is the agricultural market that is forecast to be the fastest growing industry, where the technology can be used to track livestock and monitor environmental conditions, enabling insurers to alert farmers of potential hazards such as floods and earthquakes.
Furthermore, the growth will be more pronounced in the emerging economies of Asia-Pacific, where adoption of technology is highest, insurance has traditionally low penetration and the threat of natural catastrophes are highest.
“The growing use of drones and WiFi-enabled devices in developing economies such as China, Japan and India increases the need for IoT insurance products for data analytics and big data platforms,” states the report.