Imagine a ship. Once it is built and placed into service, the vessel will require maintenance and repair. Inclement weather and natural disasters may impact travel and the delivery of its merchandise.
Is it possible for an insurer to help prevent damages and delays? Yes.
An insurance company that chooses to underwrite the risk can rely on a digital twin—a virtual representation that provides a real-time digital counterpart of a physical object or process. Digital twins will allow insurers to focus on monitoring the risk associated with the vessel rather than pay for repairs and replacements once an undue event happens. The term ‘digital twins’ was coined two decades ago by Michael Grieves. Industries—such as construction, fleet management, and manufacturing—embraced it. The opportunity for the application of digital twins in insurance is now clear.
For insurers, digital twins can provide data to take preventive steps that optimize operations and minimize losses. Digital twins of various types can advance insurance innovation across sectors by virtualizing everything from driving habits and digital fleets to smart wearables and smoke alarms. These information models can help inform decision-making that strengthens customer relationships and refines pricing and premiums.
Historically, insurers relied on data available from limited interactions with customers, most frequently at the touch points created when a product is purchased or when a claim is made. Today, historical data simply is not enough.
Fortunately, technological advances are allowing insurers to rely on real-time data from digital twins. The internet of things is a primary force behind the use of digital twins, as the IoT collects and provides a large amount of data from a wide range of devices. Other technologies that are advancing the use of digital twins in insurance include cloud computing, which supports the compute and storage needs of digital