The three lenses of IoT in commercial property – operations, risk & ESG: a focus on Risk

IoT technology and real-time data insights are becoming increasingly prevalent in the management of  Commercial Property. Building owners and facilities management organisations realise that by deploying devices and responding to the data alerts, leaks can be fixed quickly, machinery repaired far sooner and loss and downtime are reduced.

What is often missed however is that IoT and real-time data insights also present an  opportunity to reduce insurance premium. Very few, if any, Commercial Property organisations realise that when they build their business case to deploy IoT, they could include insurance as a cost saving line in their business case.

By deploying IoT, this is potentially a better managed property. Commercial Property owners and managers therefore have a strong case for insurance premium savings. 

• Enhanced Risk Management: IoT technology offers a real-time view of risk enabling property owners to monitor and manage potential issues more quickly thereby reducing the impact of any incidents. By demonstrating their commitment to proactive risk management, this provides evidence of good risk management practices to insurers.

• Predictive and Preventive Approach: IoT devices allow commercial property owners to shift from a reactive to a predictive and preventive approach. By identifying and addressing potential issues before they escalate, property owners can reduce losses which can help  justify the request to lower insurance premiums.

• Improved Operational Efficiency: IoT technology can streamline business processes and improve operational efficiency. This means that insurers can focus on even more focused risk management advice and plans.  Loss incidents can be further reduced again

• Positive ESG Impact: By implementing IoT devices and leveraging real-time data insights, Commercial Property Owners can improve their ESG metrics, making their buildings more sustainable and attractive to insurers. There is an emerging correlation between a ‘good’ ESG score and this being a ‘good’ risk – which enables more favourable risk pricing (premium)

• Shared Purpose and Collaboration: IoT technology enables Commercial Property Owners and Insurers to work together, breaking down the trust barrier by having a transparent and shared purpose of reducing and mitigating risk. By actively engaging in effective risk management, Insurers may be more inclined to offer a more favourable premium.

A word of caution. These devices and the data must be installed and managed securely. Insurance claims for cyber attacks are on the increase because hackers are able to exploit vulnerabilities in IoT devices. This would cause premiums to increase

By leveraging these advantages and fostering a collaborative relationship with Insurers, Commercial Property Owners should be in a positive position to have a dialogue with their insurers about  insurance premium savings.