The Internet of Things (IoT) describes a network of physical devices that collect and exchange data through sensors and connectivity. In insurance and mobility, IoT turns real-world behavior into structured digital information.
For insurers, IoT is not about smart gadgets. It is about visibility. When vehicles, smartphones, or connected devices generate mobility data, insurers gain insight into how risk actually materializes, not just how it is statistically assumed.
IoT is a foundational concept for telematics, usage-based insurance, and behavior-driven risk models.
What Is IoT in Insurance?
In simple terms, IoT connects physical events to digital systems.
In motor insurance, IoT devices may include:
- Smartphones with motion and GPS sensors
- On-board vehicle units
- Crash detection systems
- Bluetooth tags
- Environmental sensors
Mobility data is collected via smartphones or optional hardware, analyzed through scoring models, and used to trigger relevant interactions or workflows.
The result: real-world driving behavior becomes measurable and actionable.
Why IoT Matters for Risk Assessment
Traditional underwriting relies on static data such as age, vehicle type, or claims history. While valuable, this approach does not capture how a vehicle is actually used.
IoT enables dynamic risk intelligence by measuring:
- Exposure to risk, such as mileage, trip duration, or road type
- Driving behavior, such as speeding, harsh braking, or smartphone distraction
Behavior- and exposure-based scoring models enhance traditional actuarial approaches without replacing them.
This allows insurers to:
- Identify good risks within high-risk segments
- Detect hidden risks in apparently low-risk groups
- Improve underwriting precision in tight-margin markets
From Data Collection to Risk Prevention
The value of IoT is not data collection alone. It is what insurers do with that data.
Connected mobility systems enable:
- Contextual risk warnings
- Driving behavior coaching
- Automatic crash detection
- Event-based customer communication
Instead of interacting only after a claim, insurers can engage customers proactively and help reduce risk before losses occur.
Privacy Considerations
IoT adoption requires strong privacy safeguards.
Modern architectures separate telematics data from personal data and transmit only aggregated scores or digital keys to insurers.
This privacy-by-design approach increases customer acceptance and ensures regulatory compliance while still enabling advanced risk analytics.
Strategic Relevance for Insurers
IoT is infrastructure for:
- Usage-based insurance (UBI)
- Behavior-based pricing
- Risk prevention programs
- Continuous customer engagement
For insurers and mobility providers, IoT provides the technical foundation to move from reactive claims handling to predictive, preventive risk management.