Looming revolution opens up new risk exposures
The coming explosion of data unleashed by the growth of the ‘Internet of Things’ (IoT) offers “an unprecedented array of opportunities” for the insurance industry, according to a white paper from insurer AIG.
“There is no doubt that the global insurance industry can play a major role,” said Dr Carlo Ratti, professor at the Massachusetts Institute of Technology, who wrote the foreword in the white paper on the growth of interconnected technology.
“There is another technological revolution looming,” he said.
“A decade ago there were about 500 million devices connected to the Internet, said Dr Shawn DuBravac, chief economist at the Consumer Electronics Association, who co-authored the foreword.
“In five years’ time there could be 40 to 50 billion. The world is producing more data than ever before and, critically, we are moving it around and using it with increasing frequency,” he said.
“At the center of this data will be the insurance industry, which uses massive amounts of data to understand and mitigate risk.”
AIG launched the report at the Milan World Expo.
“IoT is already changing the way we live, work, commute, and interact with each other,” said Lex Baugh, president of AIG Global Casualty.
“When businesses implement IoT, they also must consider what new and different risks it brings.
Baugh said the advent of driverless cars throws up a number of new risk exposures, such as manufacturer’s liability for all the components of the new system, supply chain problems, and cyber attacks on the connection between the car and the internet.
“IoT potentially shifts the root cause of loss from what we know it as today to something new and yet untested,” he said.
“Some companies are already realizing the promise IoT offers, others are just beginning to understand how it could make them more efficient, safer, and closer to their customers,” Baugh added.
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