RFID Talk Blog

Insurers hope to gain new markets from RFID deployments

Big insurers are banking on the benefits of RFID technology to open new markets in the insurance industry. Better yet, efficiency gains and reduced supply chain risks from deploying RFID could lead to cheaper insurance premiums for those that deploy the technology, bettering ROI’s that are already soaring.

At a recent RFID and food safety event hosted by the MIT Enterprise Forum, Anthony Grosso, Strategic Alliance Manager for Hartford Ventures, ?offered a unique perspective on how RFID data from food traceability and cold chain visibility solutions can be used within the insurance industry to offer new products and services for supply chain trading partners.

“We’re looking at creating new insurance markets where they don’t exist today,” says Grosso. “The concept of using RFID in the cold supply chain is new. To bring this to market and have your insurance carrier understand the risk improvement [from deploying RFID], you can perhaps obtain beneficial terms on your insurance which could even pay for the deployment of the technology itself.”

Last year Hartford Ventures, a division of insurer The Hartford, entered into a strategic alliance with Intelleflex to help both companies explore insurance-related opportunities to reduce the amount of produce lost and improve the overall quality of produce during the distribution process from the grower to the retailer.

One third of shipped produce is wasted each year, representing $35 billion annually. The partnership may also enable The Hartford to enhance its loss control and underwriting practices.

Half of this loss is temperature-related and experienced in-transit between the grower, and the grocer where even minor temperature changes can significantly reduce shelf life and effect quality. This leads to lost revenue, and prevents processors and retailers from optimizing inventory using FEFO (First Expired, First Out) management techniques. Produce losses lead to increased claims, and the lack of documented temperature variances throughout the transit and storage chain makes claims processing complex and costly.

“Together, we are exploring how to use technology to reduce the number of claims in the cold supply chain and explore these insurance related loss control services,” says Grosso. “The holy grail in my mind is that with this new technology, and this new data visibility, we could create whole new insurance markets where they don’t exist today.”

The hope is that RFID can put a major dent into the $35 billion in annual waste by automatically monitoring the data and making pro-active changes as simple as changing the routing destination of various pallets. The end result is that produce growers, distributors and retailers can avoid losses by utilizing actionable data.

“It’s simple, yet not a lot of people are doing it,” says Grosso. “The insurance industry has typically shied away from the cold chain because of the lack of data and there isn’t a heck of premium involved. And the losses can be significant, from a single e-coli breakout.

“The upside isn’t that great and the downside is huge. With new data visibility, I suspect the insurance industry would be more willing to underwrite these risks, which would only strengthen the entire supply chain.”

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