Q&A — IoT: part of the new age of predict and prevent

What is the traditional approach to risk in the property sector and why is it flawed?

The tra­di­tion­al risk trans­fer mod­el for prop­er­ty insur­ance is out­dat­ed, based on the risk and the pay­out and the claims and the loss. This trans­fer is the least best way of man­ag­ing risk. It per­pet­u­ates a cycle of avoid­ance. A prop­er­ty own­er trans­fers the risk to an insur­ance com­pa­ny to avoid its con­se­quences, when in fact it is this per­son or organ­i­sa­tion that is best placed to reduce or mit­i­gate the risk in the first place. Rather than a prop­er­ty own­er trans­fer­ring the risk to an insur­er, which prices that risk based on a notion­al assess­ment, it is much bet­ter to incen­tivise the own­er to take steps to mit­i­gate the risk through detec­tion and pre­dic­tive ana­lyt­i­cal insight. 

How is IoT technology enabling this more intelligent, proactive approach?

Real-time, data-dri­ven insights empow­er a pre­dict and pre­vent approach, allow­ing com­pa­nies to move away from claims and loss. Insur­ers wait for a claim to hap­pen, inves­ti­gate it and then have sys­tems that allow it to be paid to a client. Pow­ered by data sci­ence and IoT capa­bil­i­ties, we pre­cise­ly pre­dict and pre­vent the risk occur­ring in the first place. The new Shep­herd risk mit­i­ga­tion mod­el allows both prop­er­ty own­ers and insur­ers to gain a true under­stand­ing of risk in real time. This is game-chang­ing and empow­ers all stake­hold­ers to bet­ter man­age and mit­i­gate risks, result­ing in improved loss ratios for insur­ers while reduc­ing costs and dis­rup­tion for the prop­er­ty own­ers.

Can you expand on how Shepherd is helping to facilitate predict and prevent?

Shep­herd cre­ates new knowl­edge about the way a prop­er­ty is per­form­ing and its inher­ent risks. We do this by pre­cise­ly expos­ing and under­stand­ing the causal­i­ty of risk and there­fore empow­er­ing the own­er and insur­er to bet­ter man­age them. For exam­ple, in a sawmill, we are pro­vid­ing a deep­er under­stand­ing into the caus­es of fire. This pow­ers our pre­dic­tive capa­bil­i­ty to pre­vent a loss event. Anoth­er exam­ple is Eng­lish Her­itage where we’re pre­vent­ing cat­a­stroph­ic loss to price­less arte­facts and her­itage prop­er­ty. With Ken­wood House, we’ve tak­en an 18th-cen­tu­ry build­ing and put it onto the same data lev­el as the Shard to pro­vide many action­able insights enabling the smarter man­age­ment of the prop­er­ty and envi­ron­ment.

How do you work with companies to ensure they are collecting and processing the right data?

Data derived from IoT needs to be aligned to the wider busi­ness objec­tives. To this end, we work back­wards with the insur­er and prop­er­ty own­er, start­ing by iden­ti­fy­ing the inher­ent risks that are spe­cif­ic to a prop­er­ty or port­fo­lio of prop­er­ties. From there we pin­point what infor­ma­tion is required to mit­i­gate those risks, so we under­stand what data inputs Shep­herd requires for analy­sis. We utilise numer­ous meth­ods to extract and col­lect data, includ­ing IoT-enabled sen­sors, build­ing man­age­ment sys­tems and exter­nal data. It’s impor­tant to embrace the pow­er of IoT, but under­stand that it is not the end-game. Data analysed is new infor­ma­tion and infor­ma­tion lay­ered and shared cre­ates new knowl­edge. It is this new knowl­edge that enables busi­ness­es to make bet­ter, smarter and more-informed busi­ness-crit­i­cal deci­sions.

What does this new innovation mean for property management?

It’s an enor­mous step for­ward, a dig­i­tal trans­for­ma­tion in the true sense and a way for insur­ers to attract and retain more clients while improv­ing their claims-loss ratio by facil­i­tat­ing bet­ter deci­sion-mak­ing. Mov­ing from claims and loss to pre­dict and pre­vent encour­ages new rev­enue streams and new ways of think­ing on how to reduce rather than just trans­fer risk. Mean­while, risk mit­i­ga­tion doesn’t just apply to the insur­a­bil­i­ty of a prop­er­ty. These IoT insights are huge­ly valu­able to prop­er­ty own­ers in terms of ener­gy con­sump­tion, typ­i­cal­ly dri­ving a 25 per cent ener­gy reduc­tion, and help opti­mise assets and reduce down­time. Rather than a facil­i­ties man­age­ment team wait­ing for some­thing to break while car­ry­ing out a reg­u­lar main­te­nance sched­ule, Shepherd’s con­di­tion-based mon­i­tor­ing sys­tem can tell them the expect­ed life­time of assets. We can also mon­i­tor oxy­gen and CO₂ lev­els and mea­sure air qual­i­ty as well as foot­fall and the usage of things like heat­ing and air con­di­tion­ing so they can oper­ate at
opti­mum lev­els.

What is the future of IoT in the property risk space?

Real-time knowl­edge pro­motes bet­ter deci­sion-mak­ing, min­imis­ing risks and improv­ing your abil­i­ty to act. We’re already see­ing a lot of con­sumer prod­ucts com­ing out with embed­ded IoT, such as smart fridges and ovens, but next we’ll see this pro­lif­er­a­tion of smart devices move into the indus­tri­al scale. We’ll see smart pumps, boil­ers, heat­ing sys­tems, recir­cu­la­tion sys­tems and fans, and this will bring a lot more data that can be ingest­ed by Shep­herd. From there we can pro­vide rich­er ana­lyt­i­cal insights, allow­ing prop­er­ty own­ers to make bet­ter deci­sions about how prop­er­ties are man­aged and main­tained. At Shep­herd, we’re in the busi­ness of cre­at­ing new knowl­edge and insight. We see IoT as a fun­da­men­tal part of pro­vid­ing this
val­ue-added ser­vice of build­ing and prop­er­ty knowl­edge.

For more infor­ma­tion please vis­it www.shprd.com/iot-report

Pro­mot­ed by Shep­herd