19 Mar Sensors and Trackers: Reducing Commercial Property Claims and Premiums

The Internet of Things (IoT) refers to a network of devices (e.g., sensors, actuators and trackers) equipped with advanced software and processing capabilities that can connect and exchange information. This technology can provide a wide range of benefits to businesses, including enhancing companies’ visibility of their commercial properties and allowing them to spot and address possible issues before they lead to losses and costly insurance claims.

Business owners can collect valuable information by installing IoT sensors on their commercial properties. This wireless technology has vast data processing abilities, permitting owners to monitor their properties virtually and receive alerts about potential issues. With this information, business leaders can promptly handle these concerns and limit related damage while reducing the need to file a commercial property insurance claim. The following are types of IoT sensors to consider for businesses:

• Equipment sensors use vibration, noise and energy consumption sensors to evaluate overall system performance and the health of workplace equipment.
• Fire and smoke sensors work with a property’s existing fire suppression system to send instant alerts regarding fire and smoke detection and coordinate with emergency responders for swift remediation.
• Water sensors leverage leak and moisture sensors to identify signs of water flow and determine the source(s) of such issues. These sensors may also be connected to shutoff devices to stop water flow automatically and prevent further property damage.
• Motion sensors use detection sensors to track movement in and around a property, triggering alarms and alerting authorities.
• Temperature sensors measure temperature and humidity and deliver warnings of possible heating, ventilating and air conditioning issues, preventing damage to certain building systems and materials due to heat and humidity.

Benefits and Challenges of IoT Sensors

IoT Sensors can provide many benefits for mitigating commercial property insurance claims, including:
• Improved risk management—Through ongoing data collection and continuous monitoring of different building parameters, business leaders can better care for and maintain their properties, lowering the likelihood of costly issues that could cause widespread damage and result in related claims.
• Fewer large claims—IoT sensors can detect damage early and provide immediate alerts, allowing businesses to quickly address the causes and stop these problems before they lead to catastrophic losses and large claims.
• Boosted security—IoT sensors can improve companies’ security infrastructures, helping them deter trespassers and identify the individuals who burglarize or vandalize their commercial properties.
• Reduced premiums—IoT sensors can help businesses mitigate their exposure to commercial property damage, potentially resulting in lower premiums.

However, this technology also comes with challenges to consider, including:

• Cybersecurity concerns—Because IoT sensors coordinate with other systems and connect to the internet, they could increase companies’ digital risks and make them more vulnerable to cyberattacks. These risks could lead to technology failures, undetected property damage, operational disruptions and financial losses.
• Data privacy and sharing complications—IoT sensors’ information collection and transmission capabilities could pose data privacy and sharing issues, as the data may include sensitive company records and stakeholder information. If this data is left unprotected and exposed, businesses could be held liable for any resulting losses, sustain reputational damage and face regulatory penalties for noncompliance with applicable data privacy legislation.

Conclusion
IoT sensors can help businesses manage their commercial property exposures, reduce potential losses and limit related claims. However, business leaders should carefully analyze their benefits and challenges before implementing them. Contact us today for more risk management guidance.

Industry research showed that IoT devices have prompted some commercial property insurers to reduce policyholders’ premiums by as much as 25%.