Skip Ribbon Commands
Skip to main content

Internet of Things - Deep Dive

The Internet of Things (IoT) is broad in scope and pervasive in its nature. It isn't one technology, but a combination of technologies that provide information, access and solve problems. We are in a connected world that few have imagined and it's evolving swiftly. IoT will continue to transform the insurance industry and have a profound impact on our society, including governments, businesses, and personal lives.
In the simplest terms, the IoT is a connected system of devices including mechanical and digital machines or objects, that can communicate, sense, or interact without human-to-human or human-to-computer interaction.


IoT in Everyday Life 

There are already billions of IoT devices around our planet. Alexa and Google Home help us do homework, place orders or look up recipes on voice command. Smart thermostats like Nest allow us to monitor our heating and cooling from a mobile device and smart door locks and security systems keep our homes secure. And if you don't want to lose your keys any more Trackr or Tile make it easy to find them!

But, what does this mean for the insurance industry? 

Insurance Impacts and Deeper Definitions 

IoT Ecosystem

The Internet of Things integrates four distinct layers of capabilities to enable revolutionary new capabilities. 
Sensors communicate with the network to move the data to the computing platform where the business applications interact with the data to draw conclusions and make decisions.


Sensors are at the remote end of the IoT stack. Appropriate sensors are deployed depending upon the monitoring need. Sensors have built in communication capabilities to connect to the network.

Geospatial Sensors - Report their location to the network, allowing the data to be linked to location (geospatial information). For example, a vehicle can report its location and other information to update the network on travel times, weather and other information.

Environmental Sensors - Report in situ data, enabling remote monitoring of systems and processes or early detection of severe weather events. Wave sensors in the ocean monitor and report on wave and storm activity.
Biosensors - such as smart watches, activity bands and rings, along with emerging implantable devices monitor and report status of humans and animals. They enable remote monitoring by either humans or machines, providing early detection of potential health concerns.

Equipment sensors - Embedded in standalone machinery, or as part of larger integrated systems and processes. Sensors detect and remediate issues to prevent equipment losses or maintain process/production quality and efficiencies.



The network enables sensors to transmit data to the computing platform. The network consists of both short range and long-range communication protocols. 

Short Range: For short range communications, low power technologies such as Bluetooth and Radio Frequency Identification (RFID) allow sensors to communicate between themselves and with the long-range network.

Long Range: Communication of data over longer ranges occurs either via cell services or non-cellular networks such as Z-Wave or Wi-Fi. New 5th generation (5G) cellular networks bring faster speeds, lower latency and the ability to connect more devices such as phones or sensors. 


Computing Platform

The computing platform performs multiple tasks, ranging from managing communications to analyzing data and either making autonomous decisions or alerting operators of situations requiring their intervention. 

These platforms can be either located in dedicated data centers or as cloud services provided by third parties such as Amazon Web Services. The platforms perform low level processes such as communications and device management, but also provide sophisticated services such as application enablement, analytics and decisioning. 

Business Applications

The final layer in the IoT stack is the business application layer. The business applications request or receive information from the computing platform to provide the services of the application. These applications can be consumer or business centric.

For example, a consumer centric application could be a smart speaker from Amazon or Google, or a home automation application like Philips Hue or Apple Home Kit. 

Business applications could be industrial monitoring and automation such as environmental monitoring at a petroleum refinery, or a mechanical breakdown application deployed by an insurer. 



Monitoring: The process of observation of variables with the intent of regulating those variables or reporting departures from normal ranges

Diagnostics: The output of monitoring is analyzed by the computing platform, allowing the identification of trends and possible solutions.

Management: Using responses from the business application to affect systems or processes towards desired outcomes.

Safety: Systems improve safety through early warning leading to avoidance, or improving response time after the event.

Security: Sensors and business applications can be used to improve security through intrusion detection and reporting.



  • Consumer: Residential automation, autonomous vehicles, wearable health monitors
  • Industrial: Process monitoring, equipment breakdown
  • Agricultural: Animal husbandry, moisture monitoring for crops
  • Retail: Inventory control, automated checkout
  • Energy: Use monitoring, greater efficiency, improved load projections
  • Cities: Detection of trash levels in refuse containers, traffic flow monitoring



ACT 2017 Risk Advisory on IoT
  • Sets mid-level understanding of the IoT
How will the IoT Impact Insurance?
  • Opportunities and challenges with connected devices
  • Dissects opportunities for IoT insurance coverage itself
Deloitte: Using IoT to Drive Differentiation
  • How insurers can use IoT for growth
  • Focusing on IoT thru the lens of insurance
  • Recommended steps insurers can take
LexisNexis: 2018 IoT & the State of Insurance
  • Stat-based white paper on industry progress/challenges of IoT
  • Many opportunities from positive consumer willingness
  • However, industry adoption is slow and some carriers do not have an IoT strategy


​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

Follow Us!

​Empowering Trusted Choice®
Independent Insurance Agents.