As technology and the internet of things (IoT) continues to evolve, connected devices, in turn, continue to proliferate within our personal and professional lives. Devices such as wearable sensors, connected equipment and industrial monitoring products that track and share data are helping insurers lower their cost of risk. The Hartford’s IoT Innovation Lab, for example, is using the increasing availability and adoption of connected devices as an opportunity to reduce the potential for loss by using the data from these devices to raise risk awareness and improve safety conditions for its commercial customers.
“Perhaps the biggest potential impact of this type of technology comes from the fact that data from these connected devices is provided in real time and 24/7,” said Dan Campany, head of The Hartford’s IoT Innovation Lab. “This allows insurance companies to identify and remediate risks, like detecting a pipe leaking and being able to shut off the water before damage to property occurs – or even identifying if a worker is not wearing protective equipment. Beyond risk management, the data from connected devices will help us create differentiated products and services including more equitable premiums for safer customers, usage-based coverage, tailored risk intervention programs and improved claims handling.”
Most recently, Campany and his team have focused on water damage within construction sites and other higher risk subsets, such as schools. Water-sensing technology devices are used to get a better understanding of the presence of water, water flow and overall water risks to a jobsite or property. This technology includes:
- Water sensors that can be strategically placed to detect the presence of water and send alerts.
- Flow monitoring sensors that are located near the main water meter(s) and can detect unexpected or unusual flow indicative of a leak and send alerts.
- Temperature and humidity monitoring sensors that can help identify potential freeze conditions and send an alert before pipes burst or detect potential mold conditions.
- Automatic shut-off valves that are triggered by water sensors or flow monitors to shut off water, preventing a small leak from becoming a large problem.
For The Hartford, such devices have proven successful in lowering the total cost of risk for clients. “We’ve already saved millions in averted claims while minimizing operational disruptions for our customers,” Campany said.
Connected devices allow insurers to gather extensive amounts of data from commercial clients. Insurers like The Hartford then incorporate that data into risk management services and underwriting models. These devices mitigate risks and claims in a number of ways:
- Wearables such as belts, clips and vests can detect lifting and bending behaviors that are more likely to lead to injuries over time and remind workers to practice safe handling. Wearables can also track who comes on the job site, how long they are there, what areas they are in and when they leave. In a crisis, they can be used to determine where employees are on site and how to quickly get them to safety.
- Cameras can improve compliance with safety protocols such as wearing protective equipment, abiding by forklift zones and speed limits, and good housekeeping to prevent slip and fall hazards.
Other Notable Technologies
While The Hartford team is driving adoption of water-sensing technology and worker safety devices, they are also working with innovation-minded brokers and customers on earlier stage concepts. They are experimenting with computer vision for enhanced, remote risk engineering services and using smart building technology to provide multiple benefits to customers in addition to managing the cost of risk, such as lower operating costs, space optimization, improved energy conservation and better security.
When businesses add new connected devices to their premises, it is important to assess and manage the incremental potential risks, which vary greatly depending on the nature of the device, the network setup, the type of data being collected, how that data is being transferred, where it is being stored and what it is being used for. While most connected devices used for risk management purposes are generally safe, they need to be assessed individually on a case-by-case basis.
A device that is monitoring the flow of water through pipes is generally benign from a data privacy standpoint, but still needs to be vetted relative to the risk of creating a new entry point into the network for malicious actors if it is going to connect to the network. Biometric wearables and imagery introduce privacy considerations, but the data can be anonymized to protect workers’ identities.
“We rely largely on hardware and software vendors for the connected device solutions that we use with our customers – and we conduct due diligence on them as if we were installing them on our own premises and employees – many of which we actually do,” Campany said. “We have rigorous processes and routine checkpoints in place with our legal and compliance teams around security and data privacy. We’ve declined to pursue opportunities with vendors that cannot meet our guidelines.”
At its core, IoT relies on a reciprocal exchange of value between parties (just as do internet search engines and social media). When someone allows another party to capture data about them, it should be justified by some value that they get in return and that exchange should be transparent and equitable.
“The value we bring to customers that are willing to share their connected device data with us is the potential to reduce their cost of risk and help them have safer, more productive businesses,” Campany said. “To date, that value has been sufficiently compelling for our customers to opt in. We want to avoid preventable insurance losses and let insurance be the backstop for those things that are unpreventable and unpredictable.”
Contact The Hartford’s IoT Innovation Lab at IoTLab@thehartford.com para conocer más.
Article appeared in the October 2020 issue of Risk Management.