Insurance firms have spent the past several years experimenting with and piloting Internet of Things (IoT) technology to see how the technology could improve their output. However, the time for testing is coming to an end, raising the question of what insurers should look for as they adopt these solutions.
FinTech Global recently spoke to Dan Simmons, managing director and founder at Quensus, to explore what hurdles firms are facing when it comes to IoT adoption and how to ensure success.
The IoT insurance market is a rapidly growing space. Research from Mordor Intelligence reported that the market had an estimated value of $49.4bn in 2024 and is projected to reach $76.73bn by 2029. This growth is due to growing adoption within insurance models, as well as rising use cases for IoT to mitigate premium and risk-related costs.
There are several different use cases for IoT within insurance. Within the auto insurance space, the technology can help to track mileage and driving habits to offer more personalised quotes, while in property insurance the technology can be used in smart water sensors to track leaks or abnormal water flow to mitigate major damage to buildings. Similarly, IoT can be used within life and health insurance to track a person’s activity and vitals for better coverage, and marine insurance can leverage GPS tracking and other sensors to assess potential risks or damage.
With such wide use cases, it is no surprise insurers have been experimenting with the technology, but going from a proof of concept into full-scale integration is not always easy. At first glance this might look like a technology issue, but in fact, it is a human one.
Simmons explained, “Beyond pilots, scaling the software and ordering hardware is actually the straightforward part. The real headache is scaling the human side: getting qualified engineers on-site to install, calibrate, and maintain devices across thousands of properties without quality assurance slipping.”
Data governance can also cause internal friction, he stated. Building managers can get nervous about network security or misinterpret rules, such as GDPR, and treat basic building telemetry as sensitive personal data. Elsewhere, IT departments can refuse access to local Wi-Fi networks or restrict data access. This then leads to a need for cellular SIM cards and bespoke monitoring setups for individual clients, which can bloat timelines and costs.
Simmons noted that one of the challenges insurers can face when trying to implement IoT is bridging the gap between legacy IT infrastructure and continuous data streams. He explained that plugging high-frequency sensor streams into policy administration systems that are decades old is a recipe for disaster.
“The solution is putting an intelligent middleware layer between the two to do the heavy lifting at the edge. Instead of flooding legacy platforms with raw telemetry, this layer normalises the data into actionable events: a pipe leak alert, an automatic valve shut-off trigger, or a shift in the property’s risk score. Core systems only ingest clean, high-value insights, keeping data silos at bay without overloading old infrastructure.”
Being able to fully integrate the technology and ensure there is a unified data layer has more benefits than simply boosting monitoring. By ensuring there is real-time IoT asset intelligence, insurers can offer dynamic, parametric insurance products. The biggest benefit will be turning insurance from a reactive process to a proactive one that can help to prevent incidents from occurring.
Simmons pointed to property insurance policies that protect against water damage. By implementing live water flow and occupancy monitoring, if a sensor detects a leak outside of office hours, an automated valve can shut off the mains and trigger a parametric workflow. This can minimise any potential damage, which otherwise would have continued until significant damage was already done.
“The policyholder receives an immediate, automated response without waiting weeks for a loss adjuster, and the insurer avoids a six-figure water damage claim. It turns insurance into an active, real-time protection service where both sides win.”
Finding the right partner is key. While some solutions might look good on paper, they might falter in full-scale deployment. As such, Simmons has some advice to insurers looking to partner with an IoT-focused InsurTech. He explained that the most successful collaborations see InsurTechs as a long-term risk partner rather than simply as a hardware/software vendor.
For this to work, it requires regular, structured catch-ups and co-innovation. He added, “Look at our work with Aviva on the Water Efficiency Lab (WEL1) “Project Dash” we actively combine live water telemetry with occupancy data to test how verified risk reduction can translate into lower premiums and incentives. When insurers involve InsurTechs directly in strategic research and live initiatives, the sensor data actively shapes underwriting discipline and loss ratios, rather than sitting forgotten in an app after installation.”
Telematics in insurance is becoming a core differentiator and firms that delay the switch from pilots to full-scale adoption could be left behind.
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