Innovation in insurance with IoT
An increasing number of insurance carriers are looking to the Internet of Things (IoT) as a source of data and insight that can help with new product development, risk identification and pricing, and even new value-added services that support policyholder retention. IoT is new territory for insurance carriers, and they are looking to experiment and innovate to determine how data from vehicles and smart devices can influence their businesses. To do that, they need to do rapid and cost-effective proofs of concept that enable them to determine the right business models and products to offer.
Microsoft Azure is a fully formed cloud-first data platform that makes all this possible by enabling insurance carriers to quickly and efficiently gather, store, mine and analyze the vast quantities of data that an IoT project will generate.
Gather, store, mine, analyse
Data gathering is enabled through Azure Information System Services (ISS), a service bus in the cloud that can be used to gather data from any device, sensor or other asset you want to factor in. For telematics or usage-based insurance, that could be an in-car system, plug-in dongle or a mobile phone app that uses the phone’s GPS location data or accelerometer to track driving behavior. In smart home or smart facility, that could be any home automation or other smart device (and we’re seeing an explosion in devices in the market at this month’s annual Consumer Electronics Show). Quite simply, any device will do.
SQL Azure is a cloud-based version of SQL Server – a relational database in the cloud — that can be quickly set up to store the volumes of data in these IoT projects, without investing in physical hardware or waiting for the infrastructure to be put in place. As it’s a database as a service, SQL Azure also can be quickly scaled up and scaled down like a utility, which also helps enable rapid innovation.
Azure Machine Learning provides cloud-based predictive analytics. It allows insurers to apply algorithms to mine their data sets in an automated way, so they can identify patterns and valuable relational data. That’s important both because of the sheer volume of data you’re collecting, and because it can be a real challenge to find data scientists. Azure Machine Learning allows you to automate some of that process.
Our data analysis toolset, HDInsight, along with the PowerBI presentation layer, enables data scientists and business users to analyse the data, make sense of it and bring that data into consideration for product development, underwriting and risk, and for general customer analytics.
Our work with UK insurer Aviva shows the benefits of Azure in action. Aviva developed the Aviva Drive mobile application for a telematics insurance offering for both personal and commercial auto. The app was developed for iOS, Android and Windows phones, using the devices’ accelerometer or GPS positioning data to monitor users’ driving habits. Policyholders receive a discount on premium at the start, and then are eligible for other discounts as they improve their driving based on feedback provided through the app. With more than 300,000 downloads so far, Aviva Drive generates a huge volume of data that needs to be stored, managed and analyzed effectively. Storing that data in the cloud enabled Aviva to put the program together quickly and get it to market.
Venturing forward
We’re seeing increasing interest among insurance carriers in the smart home or smart facility type of opportunity, where a growing collection of home automation devices, from internet cameras and motion sensors to gas and water leak detectors, is providing data and insights that can inform insurance products as well as value-added services that helps shift the conversation from insurance to protection. This can be an interesting proposition for carriers, but in these early days of the Internet of Things, many carriers want to better understand what is possible, based on better insight into the type of home or building automation devices that are available or being developed for the market.
Our Microsoft Ventures team is investing in the development of those devices in partnership with American Family Insurance, a US insurer that is interested in offering smart home policies. Together, Microsoft Ventures and American Family Insurance formed a four-month accelerator on the Microsoft campus in Redmond, Washington, to support start-up firms that are developing home automation devices. These start-up firms send employees to live and work near our campus, to access technical help from our engineering teams and data scientists who can help them understand how to collect and make use of the data their devices can provide, receive business coaching, gain exposure to potential customers, and access potential investment opportunities. Interest in the accelerator has been enormous. Our Microsoft Ventures team expected about 100 applicants for roughly a dozen spaces, but they received close to 500 and we’re seeing a range of devices, touching almost everything in the home.
From our perspective at Microsoft, the Internet of Things is a fascinating place to be. Not only do we provide the infrastructure to ingest, house and analyse the data; we also invest in joint ventures that support the development of devices that are pointing the way to an interactive and proactive relationship between insurers and their customers.
You can find out more about Microsoft Azure at www.microsoft.com/azure, and about Microsoft Ventures atwww.microsoftventures.com.
