How IoT technology is transforming insurance

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IoT sensors are revolutionising insurance across industries like hospitality. Find out how SafetyCulture Care’s data-driven approach helps cut claims, reduce costs and enhance client experiences through proactive risk management

WHAT DO melting ice creams at the movies, a fitness centre with leaky pipes, and a fire at a chocolate factory have in common? They all caused problems for businesses that, in the past, would have led to ballooning costs, loss of business or even uninsurability, but through the use of sensor technology were able to be solved quickly, resulting in efficiency gains and a string of other unexpected improvements. At the heart of these unlikely success stories is SafetyCulture Care, an insurer with a technology platform that uses the Internet of Things (IoT) to help businesses monitor and manage their operations in real time. SafetyCulture Care is an example of what the future of insurance may look like – employing the power of proactive prevention through data monitoring to manage risk and help make sure that insurance claims become an increasingly rare event.

SafetyCulture Care is an insurance and technology solution for businesses with a proactive, risk-minded approach. By combining insurance with the power of its technology platform, SafetyCulture Care gives customers the tools, knowledge and confidence to work safely, meet higher standards and improve every day. Through technology and data-driven insights, SafetyCulture Care delivers comprehensive insurance to meet the needs of various industries, including hospitality and manufacturing.

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Benefits of automated monitoring

Quick and easy compliance

“You can get the information right at the moment something is happening, so you can do something about it immediately”

Tom Cooper, SafetyCulture

The managing director of SafetyCulture’s IoT division, Tom Cooper, acknowledges that at its core it’s an improvement product. The SafetyCulture platform brings operational insights to the surface with the goal of empowering customers to run better, safer businesses. Rather than having insurance front and centre in risk management, the technology provides customers with tools to work safely, protect assets and implement change before something turns into an incident. By using data to anticipate issues before they arise, companies in sectors like hospitality, retail and manufacturing are also discovering unexpected ways to boost their bottom line – converting the broker role from one that a business mainly relies on during a period of crisis, to that of a trusted adviser who can support the business’s continuous improvement. By giving clients the tools to run their businesses better, brokers are helping clients identify ongoing insights into cost savings and efficiencies because problems can be anticipated before things go wrong.

In the hospitality industry, a single food safety incident can tarnish a brand’s reputation overnight. “We built a platform that helps these customers stay compliant and improve quality and efficiency,” says Cooper. “And it’s an important differentiation here, because I think it’s the main reason we’re having success with the adoption of IoT.” Cooper emphasises that SafetyCulture’s solution is about fundamentally improving business operations, not just saving insurance costs. This approach has led to some impressive

results. A national cinema chain, for instance, saw a 93% reduction in stock-loss claims year-over-year after installing temperature sensors in freezers, saving approximately $70,000 annually. The key to helping customers improve their businesses lies in the use of IoT technology. “With IoT, the beauty of it is you start to get the data 24/7, and in real time,” Cooper explains. “So, for our sensors, the data can come through as quickly as every minute, depending on what you’re tracking.” This constant stream of data allows businesses to shift from a reactive to a proactive stance on risk management. Instead of discovering problems during scheduled checks or after an incident has occurred, businesses can now receive alerts and take action before a situation escalates. “The idea with that is you can get the information right at the moment something is happening, so you can do something about it immediately – before the risk takes full effect,” Cooper says. IoT can even rescue customers from uninsurability in some cases. Cooper describes a fitness centre that was facing non-renewal after incurring significant claims due to two burst pipes. Unable to find coverage elsewhere, the business was in a precarious position. But by implementing an integrated sensor and insurance solution, the client was retained by its broker. The gym then mitigated a potential third $30,000 claim by installing sensors to monitor pipe temperature during winter, effectively preventing frozen pipes. “An insurance-backed IoT solution actually solved the problem, where traditional insurance walked away,” Cooper says.

The platform has also led to energy savings and extended equipment life. Cooper explains that a business was setting its refrigeration temperatures much lower than needed. “It’s astonishing how many fridges and freezers have unreliable thermostats. As soon as you get the data, you see that either the fridges are running at one to two degrees, or the freezers are set at minus 30 degrees. There are two impacts there: it’s exponentially more expensive to keep these assets at a cooler temperature [than required], so our customers can then start to save on costs [by adjusting a few degrees] … the engines had been required to run harder, so increasing the temperature actually extends the life of the asset.” Cooper has a list of cases where huge amounts of money could have been saved had real-time monitoring been used. It’s estimated that $930,000 worth of breakdown losses could have been mitigated had sensors been installed across one portfolio.

The key piece of equipment had to be imported from Italy – an eight-week process. Because the claim was approved almost immediately on the back of verifiable data, the machine was ordered in time for the chocolate maker’s peak production period, also preventing the loss of a major contract. “From that perspective, it was invaluable to get that business back up and running,” Cooper says. On the insurance side, the business interruption claim was also significantly lower due to the speed of resolution: “The

claims payout was 80% less because the business interruption was significantly shorter as a result.”

A cloud icon with digital graph lights hovers over a circuit board, symbolizing cloud computing and data analytics integration with technology.

Sensors: the secret to unlocking proactive risk management

Unexpected benefits of risk mitigation tools

Published 05 Nov 2024

“Change management is the single biggest problem our customers face in terms of trying to bring in digital solutions and technology solutions”

Tom Cooper, SafetyCulture

Reduced stock-loss events

Significant energy cost savings

Improved brand and reputation

Streamlined claims process

Source: SafetyCulture Care

37% of all hospitality claims are due to machinery breakdowns

88% of kitchen breakdowns involve a refrigerator or freezer

Causes of insurance claims in hospitality sector

Source: SafetyCulture Care

While the primary goal of SafetyCulture Care’s platform is risk mitigation, many users have discovered additional benefits that improve their overall operations. Cooper shares an example from a food delivery service: “Not only does the temperature data show you what temperature the food stock is at, but you can start to see the performance of the asset through the temperature data as well.” In one instance, this data helped identify a tripped circuit breaker in a cool room containing over $100,000 worth of stock, preventing a potential disaster.

Sensors and IoT technology are also revolutionising the insurance claims process. Cooper cites a case involving a chocolate manufacturer that had a fire in the lead-up to the crucial Christmas season. “Because they had temperature sensors in the room and along the production line, the forensic team was able to use the data to verify what they thought had happened. They could pinpoint the cause of the fire and approve the replacement of the equipment right away.”

Transforming insurance claims

As the industry evolves, Cooper sees a shift in attitudes to business resilience and risk management. “I think people are more educated on why [this approach] is important. We always say that no one gets out of bed and says they want to run their business poorly. Everyone wants to make sure that they’re running a business that’s doing really well. We just need to provide the tools to help them.” This shift presents opportunities for insurers, brokers and businesses alike. Cooper explains, “It’s not a win-lose scenario, where someone wins and someone loses. Everyone will win because we’re just starting to use that data more effectively to reduce the inherent costs that are within the industry to begin with.” Cooper says brokers report high praise from the businesses with SafetyCulture Care policies, due to the tangible benefits in time and cost savings that quickly accrue as they adopt technology. However, challenges remain, particularly with integrating new processes. “Change management is the single biggest problem our customers face in terms of trying to bring in digital solutions and technology solutions.” To address the challenge of adoption, Cooper says, “We spent a lot of time investing in the mobile experience – so tablets or mobile phones – because we find that many of these back-office ERP systems are not designed for the frontlines.” This mobile-first approach has significant implications for frontline workers’ engagement with the platform. Cooper says, “The reality is, a lot of the frontline workers come from diverse backgrounds. They might not be used to using tech in their day-to-day responsibilities.” If the platform is easy to use for such workers, they often become more engaged. They’re more likely to report issues, engage in proactive risk management and contribute to overall business improvement. They also feel that their contributions are better heard because they can see processes improving in front of their eyes and their jobs become easier. Cooper shares an example: “We were rolling out to over 200 franchises, and it was great to see a ripple effect where franchisee owners started to realise how simple it was and all the great stuff that was coming from it. We shipped all the sensors to each of the franchises. It takes them one to two minutes to set up. And then we see them have a moment where they are like, ‘Oh wow, this tool is not a compliance obligation. It’s actually a tool that’s going to help me run my business better.’ ” As the hospitality industry continues to grapple with evolving risks and tighter margins, the integration of insurance with IoT technology and proactive risk management strategies may well become the new standard. By transforming data into actionable insights, businesses can not only mitigate risks but also unlock new efficiencies and opportunities for growth. The recipe for success in hospitality might just include a dash of sensors, a sprinkle of smart data analysis and a healthy portion of frontline engagement.

A win for insurers, brokers and businesses

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