GENERAL INDUSTRIES | CLIENT RESOURCE
A look at this emerging technology’s uses, benefits and risks
BY THOMAS TOWNSEND
More than 127 new devices are connected to the internet each second
By 2025, the number of network-connected devices is projected to reach more than 50 billion
68% of middle-market business owners are concerned with IoT devices being compromised by cybercrime
The world is more connected than ever before. In nearly every aspect of our lives, we can rely on a connected device to make tasks easier. Whether it’s a smart home security system, a wearable fitness tracker, an internet-connected car or an in-home voice assistant, smart devices have exploded in popularity in recent years.
At its core, the IoT is a network of devices, all connected to the internet and equipped with sensors that transmit, collect and share data
These devices are all part of the Internet of Things (IoT). At its core, the IoT is a network of devices, all connected to the internet and equipped with sensors that transmit, collect and share data. While these devices are impressive, their potential is just beginning to be unlocked. According to research from McKinsey & Company, there were 12.5 billion network-connected devices in the world a decade ago. By 2025, that number is projected to reach more than 50 billion.1 To put that growth into perspective, it is estimated that more than 127 new devices are connected to the internet each second.2
IoT technologies are also transforming the ways we do business across nearly every industry — including the manufacturing, construction, retail and hospitality sectors. When leveraged correctly, IoT solutions can help businesses in the middle market enhance productivity, learn more about certain aspects of their operations and improve their overall risk profile.
As these devices become more powerful, affordable and commonplace in commercial settings, it is incumbent upon business owners and insurance professionals alike to understand how the IoT works and how these devices can be used to streamline processes and build efficiencies.
There are countless ways that middle-market business owners are applying the IoT to enhance their understanding of their business and improve their operations. Here, we will examine just a few common ways businesses are utilizing the IoT.
The same powerful features that allow IoT devices to provide businesses tremendous advantages can also lead to potential hurdles that must be addressed. This is especially true for businesses that are adopting these technologies for the first time. One of the biggest disadvantages of IoT that many businesses face is the sheer volume of data certain IoT technologies deliver. In order to get the most out of their investment, it is essential that businesses leverage this data in meaningful ways and not let it overwhelm them.
This all starts before an IoT system is purchased and/or implemented. It is vital that business owners select IoT devices that are appropriate for their operations and in line with their goals. When it comes to IoT technology, what works for one business may not work for another, based on a variety of factors that include size, nature of operations, personnel and experience level with data and technology. The good news is that businesses are not on their own when it comes to selecting the proper IoT device. Insurance professionals are essential to guiding businesses to the correct devices and providing ways to best leverage this technology.
The initial phase of installing and setting up IoT systems is critical. Understanding what all of the information provided by the devices means can be challenging. Oftentimes, businesses will need to work with providers to determine what they want to measure and how they want that information displayed or provided. Additionally, data on its own is exactly that: just data. In some cases, businesses will need to take the insights gleaned from their IoT systems and pair them with personnel who can take appropriate action. For example, if a manufacturing business uses information from workers’ wearable devices to identify an issue with repetitive motions, the business’s safety professionals or management may still need to intervene to address the issue.
1 in 4 middle-market businesses surveyed reported that their devices had been subjected to an attempted cyberattack.
To that end, it is important that businesses develop protocols around their IoT programs and not lose sight of the human element of these technologies. The question of how to best interpret IoT-provided data and turn that information into actionable business practices is one that should not be overlooked. Considering these questions will help businesses see a return on investment from these devices and make their application throughout the business a smoother process.
Finally, cybersecurity and data privacy should not be overlooked when it comes to IoT devices. According to Nationwide’s Agent Authority survey, 68% of middle-market business owners are concerned with IoT devices being compromised by cybercrime. This concern appears justified, as 1 in 4 middle-market businesses surveyed reported that their devices had been subjected to an attempted cyberattack. Keeping this in mind, it is essential for businesses to take cybersecurity seriously when it comes to IoT devices and work with their insurance and technology partners to ensure their devices are secure.
IoT devices are powerful tools that can provide business owners with new insights about their business. These devices can enable businesses to make informed decisions and address risk in a more holistic fashion by coupling data with expertise. There is no doubt that, moving forward, more businesses will turn to the IoT for creative solutions to challenges in various aspects of their operations.
Learn more about wearable technologies by visiting Kinetic's website and explore Nationwide’s commercial telematics solutions by visiting our Vantage 360 Fleet® website. If you're an agent interested in growing your commercial book of business, please go to nationwide.com/agents.
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