Risk in the age of automation — new hazards and opportunities for insurers in the internet of things

One of the most powerful drivers behind the changing nature of risk is the internet of things, or IoT. First, IoT is creating risks that have no historical precedents — smart cities, smart utilities, smart homes, autonomous vehicles and connected medical devices among them. Second, because we live in world where almost everything can have a sensor embedded in or associated with it that collects data about the activities and environment around it, there is much more data available for actuaries and risk managers to analyze and provide surety against. With the capability we have today to measure practically anything, the universe of transactions to insure is much larger. In some cases it’s even possible to reduce the cost of insurance while proactively mitigating risk.