IoT Insurance Market Analysis | 2023-2029

Market Insights

The Global IoT Insurance Market was estimated at US$ 12.48 billion in 2022 and is expected to grow at a CAGR of 28.1% during 2023-2029 to reach US$ 70.56 billion in 2029.

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What is IoT Insurance?

IoT insurance, or Internet of Things insurance, is an innovative type of coverage that leverages data from connected devices to enhance risk assessment and tailor policies to individual behaviors. It involves the integration of IoT devices, such as smart home sensors, telematics in vehicles, or wearable health trackers, to collect real-time data. Insurers use this data to gain insights into policyholders' habits, enabling more accurate risk evaluation and personalized insurance offerings.

IoT insurance aims to improve efficiency, reduce risks, and enhance customer experiences by embracing the capabilities of connected technologies in the rapidly evolving landscape of the insurance industry.

Market Dynamics

The insurance industry has experienced significant growth in the global IoT market, particularly in the wake of the COVID-19 pandemic. The increased demand for health and related insurance segments can be attributed to the impact of the virus and the nationwide lockdown. As a result, many industries, especially healthcare, have increased their investment in IoT solutions.

However, the COVID-19 pandemic also presented new challenges for insurers, requiring a strategic and well-informed approach. To effectively respond to these challenges, insurance companies must establish cross-functional teams to manage their response, implement new safety protocols, and take quick action as conditions continue to evolve. To enhance their IoT offerings, insurers can utilize cutting-edge technologies such as AI, machine learning, robotic process automation, augmented reality, telematics, social media, and drones.

The growth of the insurance sector, coupled with the advent of new insurance models and increasing usage of IoT to lower premium and risk-related costs, are propelling the market forward. The adoption of digital technologies in various industries and advancements in data-gathering devices and sensors are further fueling the market growth. A report by the insurance industry indicates that 20% of insurance companies are already testing, piloting, or deploying IoT initiatives.

This rising adoption of IoT in insurance is driven by the convergence of several enabling technologies. A study by UK-based insurance provider, Lloyd's, shows that IoT offers numerous benefits to the insurance sector, such as preventing losses, improving risk assessment, detecting patterns and behaviors, fraud detection, and enabling proactive monitoring.

Forbes reports that IoT has the potential to reduce the cost of the claims process by 30% and decrease premiums by 25%. IoT not only has the power to transform the top line of insurers but also the bottom line. With consent from the policyholder, insurers can access data and alerts from IoT devices to provide services with minimum human interaction.

The growth of IoT has had a positive impact on the insurance sector by providing insurance companies with access to more data, leading to better fraud detection and mitigation. The increased use of connected devices in various industries has made it possible for insurance companies to control data more effectively, resulting in cost savings through improved protection mechanisms and reduced claims.

The growing number of devices used per customer highlights the increasing popularity of these solutions. The rise of smart grids and 5G technology is expected to further drive growth in the IoT insurance market, with vehicle telematics leading the way in 5G applications. The commercialization of 5G will enable insurance companies to collect more detailed data in real time and offer more sophisticated pricing plans. For example, Harman has launched a 5G-ready car telematics solution to take advantage of these new developments.

Segments Analysis

By Insurance Application Type

The growth in the telematics market and advancements like ADAS and self-driving vehicles are driving the adoption of IoT insurance in the automotive and transportation sectors. The NAIC Center for Insurance Policy and Research studied the impact of IoT and other technologies on the automotive insurance industry and evaluated the effects of telematics on insurers, consumers, and regulators. The study found that telematics-based usage programs provide benefits to both the consumer and insurer.

With the increasing use of connected vehicles and their connection to external IoT devices, data is exchanged and utilized to determine premiums. Automotive companies are expanding into insurance telematics while government and insurance organizations are promoting IoT-enabled vehicles for improved safety.

The Insurance Institute for Highway Safety in the US projects that standard auto brakes will prevent 28,000 crashes and 12,000 injuries. Telematics advancements enhance IoT-based insurance by facilitating premium calculation and reducing fraud claims. According to multinational risk management company Towers Watson, IoT-powered telematics technology can help reduce risky behavior among young drivers.

Regional Analysis

North America is expected to have a significant presence in the IoT insurance market, owing to the widespread awareness and swift adoption of IoT technology. Insurance companies such as Progressive, Liberty Mutual, and State Farm are leveraging the capabilities of IoT to improve their risk assessment processes. John Hancock, a leading insurance provider in the US, made a pioneering move by partnering with Vitality to provide free Fitbits to customers and monitor their health, reducing the risk of claims. This region is also home to numerous top-tier companies that offer IoT solutions for the insurance sector.

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Key Players

The major players operating in the global IoT insurance market are:

• IBM Corporation
• SAP SE
• Oracle Corporation
• Google Inc
• Microsoft Corporation
• Cisco Systems Inc
• Accenture PLC
• Verisk Analytics, Inc
• Concirrus
• LexisNexis
• Zonoff, Inc
• Axa Insurance
• American Family Insurance
• American International Group, Inc.
• Allianz Se
• Berkshire Hathaway Inc.
• Zurich Insurance Group Ltd.

Research Methodology

This report offers high-quality insights and is the outcome of a detailed research methodology comprising extensive secondary research, rigorous primary interviews with industry stakeholders, and validation and triangulation with Stratview Research’s internal database and statistical tools. More than 1,000 authenticated secondary sources, such as company annual reports, fact books, press releases, journals, investor presentations, white papers, patents, and articles have been leveraged to gather the data. We conducted more than 10 detailed primary interviews with the market players across the value chain in all four regions and with industry experts to obtain both qualitative and quantitative insights.

Report Features

This report provides market intelligence most comprehensively. The report structure has been kept such that it offers maximum business value. It provides critical insights into the market dynamics and will enable strategic decision-making for the existing market players as well as those willing to enter the market.

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Customization Options

With this detailed report, Stratview Research offers one of the following free customization options to our respectable clients:

Company Profiling

• Detailed profiling of additional market players (up to 3 players).
• SWOT analysis of key players (up to 3 players).

Market Segmentation

• Current market segmentation of any one of the product types by application type.  

Competitive Benchmarking

• Benchmarking of key players on the following parameters: Product portfolio, geographical reach, regional presence, and strategic alliances.

Custom Research: Stratview Research offers custom research services across sectors. In case of any custom research requirement related to market assessment, competitive benchmarking, sourcing and procurement, target screening, and others, please send your inquiry to sales@stratviewresearch.com.

Recent Developments

• In December 2022, Pepper, a consumer IoT platform integrated with Notion, the InsurTech business unit of Comcast, offered a new IoT and smart home solution. The new platform also offers insurance carriers seamless, customized, and connected solutions.

• In November 2022, Ablera, a Bulgarian insurtech company, collaborated with IBM and an IBM Value Add Distributor, ALSO Bulgaria to improve ABACUS, a solution for insurance firms powered by AI.

• In November 2022, Ford partnered with CerebrumX Lab, a provider of AI-driven automotive data services and management platform, to leverage Ford-connected vehicle data and create a Usage-based Insurance-as-a-Service (UBI) model for insurers.

• In July 2022, NTT DATA and SAP announced a new co-innovation solution to enhance the management of supply chain insurance. The solution, called Connected Product, is a packaged offering developed jointly by NTT DATA, and SAP SE.