Smart-home devices are gaining favor among early adopters and there is a growing opportunity for insurers to leverage smart-home technologies to create innovative new solutions that can transform the insurance value proposition. While entering this market is not simple or easy, there is considerable advantage for first movers.

Insurers are increasingly recognizing the ability of IoT devices and data to enhance their offerings and improve outcomes for their customers. Data from these devices, combined with analytics and responsive applications, can facilitate realtime risk monitoring and modelling, and incentivize behaviors that mitigate risk and help prevent claims. IoT-driven solutions will also play a big role in facilitating the transformation from a traditional insurer to an everyday insurer that provides solutions that deliver proactive, everyday advice and protection.

Smart-home products and services can help insurers develop new solutions and revenue streams, as well as deepen customer engagement. In fact, given their synergy with home-monitoring solutions, there is significant scope for insurers to actively shape the ecosystems developing around smart-home devices. But to do so, insurers need to address some key challenges.

IoT-driven smart-home devices will help insurers transform their offerings, providing customers with solutions that deliver proactive, everyday advice and protection.

A recent NTT Data survey of US carriers and consumers identifies the challenges facing insurers hoping to enter the smart-home market:

  • Inability to gain access to data from smart homes.
  • Building analytics into the carrier underwriting process.
  • Expense required to purchase and install devices.
  • Addressing consumers’ major concerns, namely security and privacy.

To address these challenges, insurers need to:

  • Build trust. Insurers need to be transparent in their use of data. They must also recognize that data security and privacy threats continuously evolve, and ensure that the technologies, methodologies, platforms and partner systems that contribute to the solution are suitably adapted to protect customer data in a changing threat landscape.
  • Partner. Develop broad and strong partnerships with smart-home product, platform, and ecosystem players, such as telcos and media companies that already equip homes with technology, to access the functionality and data from devices that will inform and enable new smart-home insurance products.
  • Invest. Insurers need to invest in the technological capabilities they need to collect and leverage data from smart-home devices. This will enable them to not only realize the full value of these devices, but more accurately and dynamically assess risk, providing differentiated solutions to customers.

The “super solution” is, of course, to build a value proposition and services that are so relevant to customers and provide so much value that negatives, like collection of data, become an acceptable trade-off. In fact, Accenture research indicates that consumers are willing to share more personal data in return for benefits.

Most consumer will provide personal data if offered something in return

Source: Accenture Voice of the Customer: Identifying disruptive opportunities in insurance distribution, 2017


Insurers are already moving fast to take advantage of smart-home technologies.

Join me next week as I look at some of the key elements—the players and the technologies—shaping the opportunities in the smart-home market.

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