The Hartford Financial Services Group, Inc. HIG is expanding its IoT Innovation Lab and capabilities. This will enable the company to use network connected devices for risk management. This move reflects the company’s efforts to utilize technology to its advantage.
The IoT has received a lot of attention over the years. The IoT essentially connects various devices, vehicles, and an array of consumer and household products to allow for advanced monitoring, analytics, and more. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
Insurance industry has been adopting the recent technological changes quite slowly.
Their business processes still include traditional modes of operations, which involve huge paper work and multiple levels of business transmission. For instance, claims settlement can take many days as it involves filling up of different forms, physical inspection of damage and other processes. This unnecessary delay creates frustration among customers, who now prefer automated processes and convenient interactions. Also, insurance companies’ product distribution and sales are done largely via brokers and agents, which create a gap between the end customers and the providers. The use of IoT is expected to accelerate the claims settlement process as well as narrow down the gap between providers and customers.
With the availability of immense data from IoT, the insurance companies can design tailor made products for their customers and detect damage beforehand. This can reduce their claims cost and aid underwriting margins. IoT data can help insurers obtain relevant customer insights to offer personalized experiences and hyper-customized products directly, thereby eliminating the need of brokers and agents in between. A portion of cost saved in these processes can also be passed on to the consumers, thus creating loyalty among them.
The Hartford recognizes that for sustained growth and profitability, it needs to innovate processes. The company is set to harness the collective power of digital data, cloud computing, predictive analytics, and digital technology for transformation of its business.
The Hartford sees significant opportunity to apply insights from IoT data to enhance its entire value chain from product and distribution, to underwriting, to risk management, to claims. These insights are expected to improve its business model and help in innovating products and services.
The Hartford has been posting increase in core earnings over the years. Though expansion of its IoT initiatives will cause additional expenses, the gains in efficiency will ultimately accrue to its margins.
Year to date, the stock has gained 39.2% compared with the
industry’s growth of 14.1%.
The Hartford carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Kemper Corp.
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