View source for Definition:Internet of things (IoT)

📡 '''Internet of things (IoT)''' refers to the expanding ecosystem of internet-connected sensors, devices, and objects that collect and transmit real-time data — and within the insurance industry, it has become one of the most transformative sources of [[Definition:Risk data | risk data]] available to [[Definition:Underwriting | underwriters]], [[Definition:Actuarial science | actuaries]], and [[Definition:Claims management | claims]] professionals. From [[Definition:Telematics | telematics]] units in vehicles to moisture sensors in commercial buildings and wearable health monitors on policyholders' wrists, IoT technology gives insurers continuous visibility into the conditions that drive losses, replacing static risk snapshots with dynamic, granular information.

⚙️ Insurers harness IoT data across the policy lifecycle. During [[Definition:Underwriting | underwriting]] and [[Definition:Pricing | pricing]], connected-device data enables [[Definition:Usage-based insurance (UBI) | usage-based]] and behavior-based models that tailor [[Definition:Premium | premiums]] to actual risk rather than broad demographic proxies — a shift especially visible in [[Definition:Auto insurance | auto insurance]], where [[Definition:Telematics | telematics]] programs reward safe driving with lower rates. For [[Definition:Loss prevention | loss prevention]], smart building sensors can detect water leaks, temperature anomalies, or equipment malfunctions and trigger alerts before a small issue becomes a large [[Definition:Claim | claim]]. When losses do occur, IoT data can accelerate [[Definition:Claims adjudication | claims adjudication]] by providing objective, timestamped evidence of what happened, reducing disputes and [[Definition:Fraud | fraud]]. [[Definition:Insurtech | Insurtechs]] often sit at the intersection, building platforms that ingest IoT feeds and translate them into actionable insights for carriers.

🌟 The strategic significance of IoT for the insurance sector extends beyond operational efficiency. Carriers that successfully integrate IoT into their value proposition can shift from a purely reactive, pay-after-loss model to a proactive, loss-mitigation partnership with [[Definition:Policyholder | policyholders]] — a transformation the industry often describes as moving from "indemnify and repair" to "predict and prevent." This shift has implications for [[Definition:Loss ratio (L/R) | loss ratios]], customer retention, and competitive differentiation. At the same time, the flood of personal and behavioral data raises important questions around [[Definition:Data privacy | data privacy]], [[Definition:Regulatory compliance | regulatory compliance]], and ethical use, requiring insurers to balance innovation with responsible governance as IoT adoption scales.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Telematics]]
* [[Definition:Usage-based insurance (UBI)]]
* [[Definition:Insurtech]]
* [[Definition:Predictive analytics]]
* [[Definition:Loss prevention]]
* [[Definition:Data privacy]]
{{Div col end}}