- Manufacturers and suppliers of connected cars and homes are betting big on IPAs: overwhelmingly favoring Amazon Alexa.
- Impressionistically, Google Assistant, Siri, Cortana and others trailed some distance behind.
- Who is in the house, what rooms they occupy—or who is in the car, going to which destinations
- And what they want to do or see or learn or buy or communicate at what times and locations
- As the value propositions of connected cars and homes increase, so does the imperative for insurers to enter those ecosystems through alliances and standalone offers
- The IPA-generated data may provide predictive value for pricing and underwriting
- IPAs are a potential distribution channel (responding to queries and even anticipating the needs of very safety- and budget- conscious consumers)
It’s Not Just Twitter’s Problem: What Insurers Need to Know about DDoS and the Snake in the IoT Garden of Eden
On Friday October 21 a massive Distributed Denial of Service (DDoS) made over 1,000 websites unreachable, including, Twitter, Netflix and PayPal. Two cloud providers, Amazon Web Services and Heroku reportedly also experienced periods of unavailability.
The attack was directed against a key part of the internet’s infrastructure, a domain name system provider, Dynamic Network Services aka Dyn. When a person enters a web address into a browser, such as google.com, the browser in turn needs an IP address (a string of numbers and periods) to actually connect with that web address. Domain name system providers are a critical source of IP addresses.
On Friday Dyn was the target of perhaps the largest ever DDoS, when its site was overcome by tens of million of requests for IP addresses. Because Dyn could not provide the correct IP addresses for Twitter and the other affected sites, those sites became unreachable for much of the day.
It also appears that the DDoS was mounted using a widely available malware program called Mirai. Mirai searches the web for IoT connected devices (such as digital video recorders and IP cameras) whose admin systems which can be captured using simple default user names and passwords, such as ADMIN and 12345. Mirai can then mobilize those devices into a botnet which executes a directed DDoS attack.
There are a number of potentially serious implications for insurers:
- An insurer with a Connected Home or Connected Business IoT initiative that provides discounts for web-connected security systems, moisture detectors, smart locks, etc. may be subsidizing the purchase of devices which could be enlisted in a botnet attack on a variety of targets. This could expose both the policyholder and the insurer providing the discounts to a variety of potential losses.
- If the same type of safety and security devices are disabled by malware, homeowners and property insurers may have increased and unanticipated losses.
- As insurers continue to migrate their front-end and back-office systems to the cloud, the availability of those systems to customers, producers, and internal staff may drop below acceptable levels for certain periods of time.
The Internet of Things will change insurance and society in many positive ways. But the means used to mount the October 21 attack highlights vulnerabilities that insurers must recognize as they build their IoT plans and initiatives.
September 20 was a good day for the development of autonomous cars. The Feds, as embodied by the Department of Transportation and the National Highway Traffic Safety Administration (NHTSA), have issued guidance and principles for the development of autonomous cars.
There are two key takeaways:
- By issuing guidance, rather than regulation, the Feds are trying to facilitate, but not control, the technological developments that will lead to street-ready autonomous cars
- The guidance makes some common sense delineations between what the federal government should do and what states should do
- The feds want one national standard for how manufacturers conduct driverless car R&D–following a 15 part safety assessment protocol (covering data recording, system safety, human:machine interface, etc.).
- The feds want the states to focus on vehicle licensing and registration, traffic laws, and motor vehicle insurance and liability
If actually followed (are you listening California?) the political and regulatory environment should speed the day when a consumer can walk into a dealer, and be driven out by a shiny, brand new autonomous car.
That day will be good for car buyers, for manufacturers, and for society as a whole.
However, for insurers that day will also hasten the decline of auto insurance—per the recent Celent report The End of Auto Insurance: A Scenario or a Prediction.
Is State Farm Pre-positioning Itself for the End of Auto Insurance (and Maybe the End of Homeowners Insurance Too)?
Once in a while an insurance company asks me for advice—and occasionally even follows the advice which I provide.
I can say, however, that State Farm has never asked me for any advice about what they should do if the need for auto insurance disappears or substantially declines. Nor has State Farm ever asked me what they should do if the demand for homeowners insurance should take a similar dive.
Some readers may be wondering why would State Farm seek advice from your humble blogger about either topic?
Well, because I have been writing and talking about the end of auto insurance for four years. My just posted Celent Report, The End of Auto Insurance: A Scenario or a Prediction? looks at how three technologies—telematics, onboard collision avoidance systems, and driverless cars—will depress auto insurance losses and premiums over the next 15 years.
I have also been writing and talking about the impact of the Internet of Things on the property/casualty industry for two years. Celent research subscribers can look at my reports: The Internet of Things and Property/Casualty Insurance: Can an Old Industry Learn New Tricks and Can a Fixed Cost Property/Casualty Industry Survive the Internet of Things?
So without even a word of advice from me, it looks like State Farm has pondered potential declines in auto and homeowners insurance; and decided to start some early positioning for itself and its agents if such things come to pass.
Proof Point: A new State Farm commercial called “Wrong/Right” shows a world without windstorms, traffic accidents, building fires, and emergencies. The commercial goes on to ask what about State Farm in such a world? The implied answer is that State Farm and its agents will be in the lending, wealth accumulation, and retirement income businesses. The tag line is “Here to help life go right.”
Which personal lines property/casualty insurer will jump in next?
Today’s announcement of Apax Partners’ acquisition of Agencyport makes sense. This deal is a further commitment by Apax to the property/casualty software sector—following shortly after Apax’s announcement of its equity investment in the soon to be independent Duck Creek.
Insurers want the internal and external users of their systems to have seamless mobile access to new business and other functionality. Agencyport has developed one of the leading solutions for agents, brokers, and policyholders find information and execute transactions with insurers’ core systems.
As is true for any technology acquisition, the soon to be combined management teams of Agencyport and Duck Creek will need to focus on communicating the benefits of their new relationship to current and prospective customers—sending a “good before, better now” message. Providing “vendor neutral” support to Agencyport customers who do not use Duck Creek solutions and Duck Creek customer who do not use AgencyPort solutions will also be crucial.
- Does the proposed use of a new technology impact the basics of the insurance model?
- Can it scale?
- Will it change the relationships among cost, price, and value in a way that is fair to the insurer, the distribution channel and the policyholder?
- Special licensing for driver/operators
- Obtaining driver/operator consent for collecting information “not necessary for the safe operation of the car” (hello interior-facing dashboard cams)
- Ongoing reporting requirements by the manufacturers on the vehicles’ performance and safety
- And, sign of the times, the vehicles must be able to detect and respond to cyber attacks