When IoT systems fail: The risk of having bad IoT data
No matter what numbers you look at, it’s clear that the internet of things (IoT) continues to worm its way into more and more areas of personal and private life. That growth brings many benefits, but it also poses new risks. A big question is who takes responsibility when things go wrong.
Perhaps the biggest issue surrounds the use of IoT-generated data to personalize the offering and pricing of various products and services. Insurance companies have long struggled with how best to use IoT data, but last year I wrote about how IoT sensors are beginning to be used to help home insurers reduce water damage losses. And some companies are looking into the potential for insurers to bid for consumers: business based on the risks (or lack thereof) revealed by their smart-home data.
But some of the biggest progress has come in the area of automobile insurance, where many automobile insurers already let customers install tracking devices in their cars in exchange for discounts for demonstrating safe-driving habits.
Called usage-based insurance (UBI), this “pay-as-you-drive” approach tracks speed, location, and other factors to assess risk and calculate auto insurance premiums. An estimated 50 million U.S. drivers will have enrolled in UBI programs by 2020.
Not surprisingly, insurers love UBI because it helps them calculate their risks more precisely. In fact, AIG Ireland is trying to get the country to require UBI for drivers under 25. And demonstrably safe drivers are also often happy save some money. There has been pushback, of course, mostly from privacy advocates and groups who might have to pay more under this model.
But there’s another, more worrisome, potential issue: What happens when the data provided by the IoT device is wrong or gets garbled somewhere along the way? Because despite all the automation, error-checking, and so on, occasional errors inevitably slip through the cracks.
Unfortunately, this isn’t just an academic concern that might someday accidentally cost some careful drivers a few extra bucks on their insurance. It’s already a real-world problem with serious consequences.
