The Internet of Things will significantly impact the property insurance technology segment. By 2020, over 50 billion devices are expected to be connected globally, changing business models and exposures. Understanding an insured's role in the IoT value chain is critical, as their operations and business income values may be volatile as new products rise and fall. Obtaining accurate underwriting information from technology companies can be difficult due to multiple locations, unique occupancies, and rapidly changing values and products. (Re)insurers must keep pace with new IT developments to adequately price policies and manage risks.

1. Impact on Property Technology Business

2. We’re living in an
increasingly
connected world.

3. Wristbands connect to
smartphones to monitor
our health.
Cars suggest the most
fuel-efficient route
to work.
Connected home security systems and
thermostats allow us remote access to
our homes from the road.

4. The ability for devices all over the world
to connect, send and receive data is often
referred to as the Internet of Things (IoT).
The impact on property insurance
particularly in the technology segment
will be significant.

5. 25B
50B
50B devices are expected to be
connected globally by 2020.
2003 2010 2015 2020
World Population
Connected Devices
Connected Devices per Person
0.08 1.84
12.5B
0.5B
6.8B 7.2B 7.6B6.3B
3.47 6.58
Source: Cisco IBSG, April 2011

6. The building blocks of the IoT are:
that allow devices to gather information, and connect
to the Internet and each other.
Chips
*MEMs are tiny mirco-electro-mechanical devices and structures.
MEMsTiny SensorsProcessors
+ + +

7. Many of these devices are already commonplace
in products and services we use in our day-to-day
personal and professional lives.
As the cost to produce these building blocks of the
IoT goes down, they become more customizable and
the scope of the IoT will grow exponentially.

8. So what does it mean
for(re)insurers?

9. 1Occupancies
are changing.

10. To stay relevant, companies
are evolving and (re)insurers
may need to adjust limits,
pricing and coverages.
*Fabless is the manufacturing of integrated circuits by a specialized third-party contractor at facilities known as Fabs.
PC manufacturing pioneer
exits the market
Large chip manufacturer
to go Fabless*
nufacturing pioneer
the market
Large chip manufacturer chooses
to go Fabless*
Software giant moves
into gaming

11. Understanding where your insured is in the IoT value
chain is critical to understanding the true exposure.
Where does a specific occupancy
fall in your risk spectrum?
Has the operation changed?
Is the insured offering new
products and services?
Is the building still appropriate for
the occupancy?

12. 2Business Income (BI)
values are volatile.

13. The global market for IoT solutions
will grow from $1.9 trillion in 2013
to $7.1 trillion in 2020.
2020
2013
$7.1T
$1.9T
Source: International Data Corporation (IDC)

14. The technology sector is already
among the most volatile industries
in terms of revenue and income.
Volatility of Returns by Sector (1962 - 2015)
Consumer Staples
Market
Healthcare
Consumer Discretionary
Utilities
Industrials
Energy
Telecom
Financials
Materials
Technology 26.6%
Standard deviations of 12-month year-over-year returns and growth rates from 1/31/1962 through 1/31/2015. Equity universe is defined as the top 3,000 U.S. stocks by market
capitalization; sectors as defined by the Global Industry Classification Standard (GICS).
Source: Haver Analytics, Fidelity Investments, as of January 31, 2015.
19.2%
22.0%
22.2%
18.6%
20.5%
17.3%
20.0%
16.7%
19.6%
15.4%

15. new products can rapidly increase a company’s revenues
and business income, but existing (seemingly stable)
products are becoming obsolete faster and can decrease
these amounts just as quickly.
For example,

16. Obtaining accurate Business Income
values from the insured and keeping
them up to date can be challenging.
a technology start-up that signs a major new
contract 6 months into the term:
Building
Contents
Annual BI
Real Exposure
After 6 Months
Initial
Statement of Values
For example,
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$
$$$

17. 3
Accurate underwriting
information can be
difficult to obtain.

18. Many technology companies are global, with multiple
locations, unique occupancies and values.
At each location...
Are you obtaining the correct values?
How is the Business Income allocated?
Are your rates adequate?
Do you understand the occupancy?
Have you factored in natural catastrophe exposure?
Fire Codes Water SuppliesSafety StandardsBuilding Codes
Each country has a different set of codes and standards:

19. Accurate information is critical in determining:
CoveragePricingCapacity

20. These are just
some of the challenges
facing(re)insurers.

21. New I T developments
will continue at an astounding
rate, impacting Property
exposures and requiring
(re)insurers to keep pace.

22. © 2018 General Re Corporation | This presentation is intended to provide background information for our clients and professional staff.
It is time sensitive and may need to be revised and updated periodically.
Our dedicated Global Technology team continually
identifies and monitors trends in technology
business.
For additional insight into this topic or to discuss
reinsurance solutions, contact your local Gen Re
representative or Peter Hakenen, Property/Casualty
Senior Consulting Underwriter at 312 207 2249 or
phakenen@genre.com.