Three technologies are having a profound impact on how insurance can help manage and mitigate risk:

• Internet of Things (IoT) technology is supplying large amounts of risk data, often in real time.
• The proliferation of artificial intelligence (AI) tools allows companies to rapidly make sense of that data.
• Advances in data storage, such as cloud storage and blockchain, provide a secure repository for storing and sharing risk data.

Internet of Things

The insurance sector is increasingly adopting IoT technology to transform traditional risk transfer models into risk prevention and mitigation strategies.

Real-time data from sensors and automated systems are used to detect and respond to incidents, leading to more informed decision-making and potentially reducing claim frequency.

The insurance sector’s embrace of IoT and connectivity represents a significant evolution in its approach to risk management, potentially offering customers a greater degree of protection.

Artificial Intelligence

AI’s impact on the insurance value chain is multifaceted, enhancing underwriting accuracy, streamlining operations, and improving risk assessment and pricing.

ChatGPT, a generative AI program garnering attention, has become the fastest-growing consumer application in history with over 100 million monthly active users.

In managing risk, AI tools are being used to provide new insights and predictive models for a wide variety of hazards, including flood risk, vehicle collisions, electrical surges and more.

Data Storage

With the proliferation of cloud storage for managing unstructured data and advances in blockchain technology, there are now more accessible ways to manage data.

Blockchain is a complex, ledger-centric technology that has a multitude of benefits, such as enhanced data security, immutability and optimized data sharing.

For one example, parametric insurance, in which a payout is triggered by a specific predefined event, is increasingly being looked at for various climate risks, such as a community’s flood losses. Blockchain can be used to automate all or part of a parametric smart contract.