Technology is constantly evolving; it is a crucial aspect of big data and the insurance industry. The amount of data available to the insurer is rapidly increasing as technology evolves.
The advancement in technology is largely the result of smart products. A smart product is an item that collects, processes, and transmits data. This product can connect and share data with other smart products.
The use of smart products and technology is used in preventative analytics. Preventative analytics is the use of statistical analysis to prevent future events. For example, using heat sensors to collect data, a manufacturing company can determine the exact temperature that a machine breaks down. This data can then be used to automatically turn off the machine before it reaches this temperature.
Important technological advances for insurance include these:
- Artificial Intelligence (AI)
- Computer vision
- Internet of things
Artificial Intelligence (AI)
Artificial intelligence is a computer that is programmed to simulate human reasoning. The computer is able to analyze data to make assumptions and business decisions. For example, AI could study voice patterns in criminal suspects to find patterns indicative of guilt.
AI is still in the early stages of development but continues to evolve; this will play a larger role in the future.
Computer vision is a technology that simulates a human’s vision to make decisions. This technology uses cameras to detect and understand physical objects and responds to the object much like a human. This technology is used in self-driving cars to read and respond to traffic signs, traffic patterns, and pedestrians. This technology is also used for facial recognition, automated checkout lanes, and automated traffic control centers.
A drone is the most common form of an unmanned aircraft. A drone is essentially a flying robot that may be controlled remotely or autonomously with onboard sensors and GPS.
- Drones are used in the insurance industry to gather underwriting and claims information. For example, insurers use drones to take photos and inspect the quality of a homeowner’s roof.
- Insurers have used drone data to analyze wildfire-prone areas. With this information, data scientists concluded that well-maintained properties in high-risk wildfire areas are better risks than poorly maintained properties in moderate-risk wildfire areas.
Internet of Things (IoT)
The internet of things is a network of objects connected to the internet. This enables everyday objects to send, receive, and transmit data to computers.
The internet of things is a network of machines transmitting data, similar to telematics but far more complex. Unlike telematics, the internet of things includes machine-to-machine communication and machine learning.
Robotics is used to measure and respond to the physical environment. This is used to automatically and autonomously respond to hazards and changes in the environment. Robotics reduces the risk of human error.
A sensor is a device that measures the physical environment, records data, and responds to it. There are four categories of sensors:
- Biochemical – this includes sensors such as fitness monitors and home diagnostic tests.
- Mechanical – this includes sensors such as motion detectors and pressure detectors.
- Radiant – this includes sensors that use radar and radio frequency (RFID)
- Thermal – this includes sensors such as heat sensors.
Examples of a sensor include the following:
- Accelerometer – an accelerometer is an instrument that measures the acceleration of an item. This also measures other aspects of movement, such as gradient, deceleration, and turning. This is often used to measure the motion of automobiles, ships, and aircrafts. This is used in telematics devices to detect speed, turning patterns, and braking patterns.
- Actuator – an actuator is a sensor that converts energy into motion, it causes a machine or other device to operate. Examples of actuators include electric motors and hard drive stepper motors.
- Heat sensors – this sensor measures the temperature of an area or item. These sensors are useful for providing information about fire risks.
- Machine sensors – this sensor monitors machine activity. These sensors are used for detecting malfunctions and alerting management of breakdowns.
- Transducer – this sensor converts energy from one form into another. For example, converting pressure into light when a sensor illuminates a warning light upon feeling greater water pressure.
- Wearables – this is a clothing sensor, known as a wearable. This sensor is placed on the clothing of an employee to gather ergonomic information. This data helps management improve the workplace.
A sensor enables the use of a “digital twin”. A digital twin is a digital replication of a physical object, used to identify risks and changes to the physical object. A sensor is placed on the physical object, the digital twin then analyzes risks occurring to the physical object. The digital twin can then make an automated physical action, such as reducing heat or turning on a light, if a risk is identified by the digital twin.
Smartphones are used in the risk management and insurance industry to measure the physical environment. This is used to measure conditions such as location, pressure, temperature, and acceleration.