It is witnessed that over the past few years, the Internet of Things (IoT), have increasingly changed the models of business in a plethora of different ways, affecting many sectors and industries in the world. Currently, it is witnessed that the insurance companies are also largely getting affected as the rate-making procedures and business models largely driven by IoT have induced a new paradigm shift in the sector. For instance, now the primary drivers are real-time scoring and telematic approaches such as:
- Auto insurance Telematics: the telemetry data can be utilized for claim reduction incentives, optimized tariffs, and measuring the insurance premiums for the risk of damage to the person or individual. The ‘Pay-how-you-drive’ tariffs is a great example.
- Health insurance Telematics: Life-style and data related to health is utilized for the measuring of plans related to health care.
It is important to note that storing the raw data produced with the contract data and structured party is not always a useful thing to do. It is more useful and effective to consider Hadoop which is a more appropriate option available. Furthermore, many consider this to be a cost-effective avenue as well. On the contrary, it is also witnessed that these large data structures are not still accustomed to handling and processing the intricate and complex relational data structures with efficacy. Hence, we can say that it is more likely that large data structures such as Hadoop and others such as Oracle which is a relational data store, would be used simultaneously in parallel by the IT sector of the Insurance Corporations.
However, it is important that we first built a strong connection between these data systems. Firstly, the data can be a combination taken from the data warehouse at the analytical data marts level, which can include the linking of streaming data to a contract number or a customer from the data warehouse. But, assuming that the IT department of an insurance corporation processes the IoT data, we can say that a scenario can be structured in which the analytics results of the big data are generated or handed over by an external service provider to the insurance corporation. In any situation, the overall problem will be to connect the analytical results with the information in the data warehouse.
Hence, we are now witnessing that many insurance corporations are starting to develop an innovative and new system of automotive tariffs. In simple words, the corporations are now rewarding the defensive driving by giving off favorable premiums. All of this is done through IoT, which is through the analyzation from a telematics box which can be installed in the vehicle and sends anonymous info on the behavior of driving by the driver.