Global investment in edge computing is projected to increase by 14% annually, reaching $228 billion in 2024. This growth is expected to significantly impact the insurance sector by enhancing operational efficiencies, according to a recent report by Allianz Commercial.
Edge computing is revolutionizing claims processing by automating workflows and enabling real-time data analysis, the report highlights. This technology is proving crucial in improving how insurers assess risks, detect fraud, and process claims, particularly through the use of Internet of Things (IoT) devices such as industrial sensors and fleet telematics.
For example, sensors installed in commercial buildings monitor environmental conditions, alerting insurers to potential issues like overheating machinery or gas leaks. These early interventions can prevent costly damages. Similarly, telematics devices used in fleet management provide real-time insights into vehicle usage and accident data, improving the accuracy of claims assessments.
Moreover, edge computing supports the rise of personalized insurance models. Usage-based insurance (UBI) adjusts premiums according to individual driving behavior, while wearable devices in health insurance track activity levels to offer customized plans. Smart home sensors further enhance this trend, detecting risks like fires or burglaries and allowing insurers to adjust policies proactively.
However, while edge computing offers significant benefits, it also introduces new challenges. Its decentralized nature increases cyber security risks, expanding the attack surface and making devices more susceptible to breaches and data theft. This requires insurers to update risk models to include coverage for cyber incidents, such as business interruptions and recovery costs.
The complexity of determining liability in case of cyber incidents adds to the challenge. Responsibility for breaches may span across device manufacturers, software providers, and users, making it essential for insurers to establish clear policy terms to manage these risks effectively.
To fully capitalize on the potential of edge computing, insurers must focus on research and development, forge collaborations with technology providers, and implement customized incident response strategies, the report concludes.
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