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We’ve all heard the buzz about 5G—how it’s going to make everything faster, smarter, and more connected. But what does that mean for the insurance industry?

As 5G rolls out across the globe, it brings faster speeds, lower latency, and the ability to connect an enormous number of devices. For insurance, that means real-time data collection, improvements in customer service, and the rise of personalized products.

To understand how this is happening let’s have a look at what 5G is. What does it entail? Its areas of impact in insurance, and of course, notable examples we can see today.

What exactly is 5G?

First, let’s break it down. 5G is the fifth generation of wireless technology, and it’s a big leap forward from 4G. It offers three key improvements: faster speeds (up to 100 times faster than 4G), lower latency, and higher bandwidth (meaning more devices can connect at the same time).

To put that into perspective, the potential download speed for 4G was 1 Gbps, while its latency, or “lag,” was between 60 and 98 ms. 5G promises to achieve—and is already achieving—download speeds of up to 20 Gbps and a latency of less than 2 ms.

Though telecoms began rolling out the tech in 2019, it has become mainstream in the last three years. At first, only new flagship devices supported it, but now even budget phones are released with the infrastructure to tap into 5G towers.

For consumers, this means everything from streaming Netflix to operating smart home devices becomes smoother and faster. But for industries like insurance, it opens up a whole new world of possibilities, allowing them to tap into cutting-edge tech like the Internet of Things (IoT) and Telehealth.

Applications in insurance

 1. Telematics and Usage-Based Insurance (UBI)

Telematics refers to the technology used to collect driving data, like speed, braking patterns, and miles driven. Usage-based insurance (UBI) relies on this data to offer personalized premiums.

If you’re driving a car that’s equipped with a 5G-connected telematics system, the insurer receives real-time data about your driving habits—accelerating, braking, even the way you corner. This data enables insurers to assess risk instantly and offer tailored premiums based on how you actually drive.

Take Progressive’s Snapshot program, for example. It already uses telematics to offer personalized rates, but with 5G, insurers can get more accurate data faster, meaning safer drivers can be rewarded almost in real-time.

 2. Claims processing and underwriting: Speeding things up

No one enjoys filing an insurance claim, but 5G has the potential to make the whole process faster and smoother. With instant data transmission, insurance companies can automate much of the claims process, reducing the time it takes to get a claim approved.

Picture this: You’re involved in a minor car accident. Thanks to 5G, your insurer can use real-time data from your car’s sensors to assess the damage instantly. Your claim could be processed and settled before you even leave the scene.

Lemonade, an insurtech company, is already using AI to handle claims in seconds. With 5G, this type of service will become even more common and reliable.

 3. IoT and smart insurance

5G is the backbone of the Internet of Things (IoT), which refers to the network of physical devices connected to the internet. Think smart thermostats, health trackers, or even refrigerators that can place grocery orders for you. These devices collect vast amounts of data that can be used by insurers to assess risk more accurately and offer personalized coverage.

Imagine a smart home system connected to 5G that monitors everything from water leaks to fire risks. Insurers can use this data to adjust your homeowner’s insurance in real-time. If your system detects a higher risk of water damage, your policy might automatically increase coverage.

In health insurance, wearable devices like smartwatches could provide real-time health data to your insurer. If you’ve been hitting your fitness goals, you might get a discount on your premium, all thanks to 5G’s ability to instantly transmit this data.

 4. AR, VR, and customer experience

5G also promises to improve how insurers interact with their customers. Augmented reality (AR) and virtual reality (VR) are becoming more popular in customer service, and 5G will make them even more seamless.

Imagine a customer having a virtual walkthrough of their home with an insurance agent—entirely online—thanks to 5G-powered VR. This could be used to assess risk, suggest improvements for safety, or even settle claims for damage. Some insurance companies like Sadas are already experimenting with VR for training adjusters, but with 5G, it can become a common practice.

 5. Embedded insurance and real-time offers

Last but not least, embedded insurance—where insurance is seamlessly integrated into other purchases—is another area 5G will impact.

If, for example, you’re about to rent a car. As soon as you’re in the vehicle, 5G allows the rental company’s system to instantly communicate with your insurer. Within seconds, you could receive a personalized offer for temporary car insurance, specifically tailored to the risk factors of that trip.

This “insurance on the fly” model is already in its infancy with companies like Cover Genius, but 5G will make it much faster, more efficient, and more customizable.

Bottom line

The future of insurance looks promising, and 5G will be a big part of that change. With personalized premiums based on real-time data, faster claims processing, and more accurate underwriting, 5G will make insurance smarter, quicker, and more customized for each person.

As this revolution continues to unfold, the relationship between 5G and insurance will become an everyday part of how we protect ourselves and our assets in a hyper-connected world.