The major expansion of data capture brought about by the growth of the Internet of Things (IoT) could reduce the number of insurance claims and premiums, according to new Lloyd’s research.

The revolution could enable innovation throughout the insurance value chain, the paper says.

Advances in IoT safety technology have the potential to detect and mitigate risks through sensors and monitoring and controlling operations, which could reduce claims losses, Lloyd’s says.

The enormous scale of data capture and management that IoT will bring could lead to better risk assessment and more flexible, real-time products. Personalised policies will be able to predict and mitigate risk based on large-scale data and trend analysis.

About 25 billion devices are predicted to be connected to the internet within two years. Some studies estimate that figure will rise to 125 billion by 2030, Lloyd’s says.

More will also be known about insureds, creating new business models, real-time insurance policy generation and quicker exposure of fraudulent claims.

However, making risk assessments will be complicated by the range and quality of security standards that currently exist for the IoT. Regulatory gaps need to be plugged as well, with liability uncertainty a particular issue.

The make up of the workforce will also need to change. Actuaries will need programming skills as insurers try to exploit the opportunities brought about by the IoT, the paper says.

The industry will have to work much more closely with the tech sector, adopting cutting-edge developments in data science.

Click here to read the report.