Ondo Insuretech (LON: ONDO) shares are up 100% this morning on the back of a deal announced with WNS (Holdings). That sounds like a lot for something that has, as yet, produced nothing except this announcement. But on the other hand it's the beginnings of a validation for the basic idea here. Which is to use the Internet of Things (IoT) plus a bit of Artifical Intelligence (AI) to do something actually useful. Sure, lots of people are thinking about IoT as a way to turn on your central heating before you get home, or for the fridge to order milk when you're running out. But that's sort of fun stuff rather than the realo addition of economic value.
It's also true that AI is quite the thing right now with ChatGPT, Bard and the rest. VBut while that may change journalism - or the music business - that's not really where the grand value is likely to arrive from. Instead, adding AI to things that we already do, in order to do them better, will create that real economic value. And it's worth reminding ourselves that real economic value add can be charged for - which is the thing we really desire from an investment in a supplier of such things.
CollectedOndo Insuretech share price from London Stock Exchange
The pitch is to the insurance industry, not to the individual householder here. Water damage is a significant problem, insurers pay out mountains of money for it each year. If we were - or if Indo were - to combine sensors in the home - that's the IoT bit - then we could measure water movements inside the house. Add AI - and whether Ondo calls it this or not this is what it is - to look for changes in water usage and flow patterns and e should be able to catch things going wrong before they do too much damage. And that really is the pitch. Insurers can roll this out to their customers, potentially charge lower premiums and thus gain business. Because their claims payouts from water damages should, in theory, be lower as a result of catching problems early.
Well, it's a pitch. Clearly, this all needs to be tested in the real world. But the interim stage is the requirement to get insurers on board with the idea and trying it out. That's what the WNS deal does. It doesn't prove that the technology works out there in reality. But it does provide a validation in that folk are now going to try it out.
Thus the leap in the Ondo share price, obviously.