Other parts of this series:
The growth of smart-home devices offers insurers an opportunity to create a new, more relevant value proposition for customers in a connected world.
What if insurance companies helped people protect their assets, not just insure them? What if they helped people think about their lives, not just their deaths? Such customer engagement is possible today, and is helping insurers reach underserved markets. Smart-home technologies are part of their new toolset.
The smart-home market growth stats are encouraging. Juniper predicts sales of $83 billion in 2017, rising to $195 billion by 2021. But this market has some way to go to reach its full potential, thanks to key barriers. In fact, Gartner puts smart homes in the early adopter phase. For insurers, this presents a significant opportunity.
Insurers have a natural synergy with smart-home technologies. Home security solutions and smart devices that monitor key areas of failure—water leaks, doors left open, etc.— will not only mitigate risk, they could help lower and prevent claims. This radically changes the insurance value proposition. Instead of dealing with the aftermath of disaster through claims payouts, insurance becomes a living solution—one that helps customers protect their assets and wellbeing and improve their quality of life.
Targeted smart-home insurance solutions that deliver real value can also serve another purpose, helping consumers overcome many of the barriers to adoption of smart-home devices and bridging the gap between early- and mass-market adoption.
Barriers to adoption
While a recent 2017 report from BI Intelligence suggests that the US market, currently the biggest market globally for smart-home devices, is entering the mass-market adoption phase, the researcher emphasizes that the same barriers to adoption persist—high prices, technological fragmentation, and consumers’ lack of a perceived benefit from the devices are resulting in low demand.
Quite simply, users are wary. They remain unconvinced of the value proposition. Smart-home devices remain expensive and digitizing homes raises privacy and security concerns—hackers may be able to gain access to security cameras or data from smart devices, figure out when the home is not occupied and even take control of smart appliances. In addition, a fragmented market and a lack of technology standards means there is as yet little integration between devices. Setting up, using and managing smart-home devices is still far from easy.
So why is the market growing at all?
Smart-home devices and solutions include security, access control, water and energy management, environmental control (HVAC, lighting, thermostats), entertainment, smart kitchen and appliances, and home healthcare devices. Of these, the biggest sellers are smart security, environmental control and services that add convenience to homes.
For insurers able to leverage these and other emerging technologies (wearables, healthcare and alerting apps) to create solutions that add real value, there is a real opportunity to reach new and underserved markets with innovative new insurance offerings.
Exciting examples are already emerging in areas such as medical, life and home cover.
Health and security—smart-home devices help insurers create innovative ‘living’ solutions.
An increasingly large aging population needs more care. Technology can assist. Two connected-wellness programs for seniors illustrate the opportunity.
- Europ Assistance Group’s Connect&Moi uses connected devices and algorithms to learn seniors’ habits at home. It tracks motion to help prevent falls and identify decreases in activity. Changes in a person’s habits alert an emergency call center.
- Groupama’s Noe uses Z-wave technology. It comprises a connected tablet that allows a senior to be directly linked with relatives. A fall-detection wristband with an alert push-button links seniors to a 24-hour helpline, and an app and social network allow caregivers to connect virtually with elderly family members. Based on wearable technology, Noe provides remote assistance through an app so caregivers can centralize information and interact in real time with seniors at home.
This not only offers the potential to lower premiums. It also gives insurers the opportunity to increase their relevance in a connected world, changing the insurance value proposition from reactive to pre-emptive—creating a living solution that adds value in real time and provides peace of mind.
Another example of an insurance solution that redefines value is the Homies project.
Asset protection for underserved markets
The Homies solution illustrates how insurers can step up, not just insuring household contents, but helping to safeguard the home.
An initiative of Dutch insurance company Achmea and Accenture, Homies is a peer-to-peer alarm platform that allows neighbors, friends and family to help each other out in case of fire or a burglary.
Achmea believes an insurer can no longer afford to simply insure its customers’ risks and compensate them in case of a claim; it must expand its field of interaction to risk prevention and, more globally, to daily proactive support for more of its customers’ challenges during their entire life.
The Homies proposition targets households and neighborhoods by connecting people and developing mutual trust. It makes use of home security solutions such as Point (Minut), Roost, the Homies intelligent burglary sensor and others, connecting all residents enrolled to the platform to messaging apps such as Whatsapp and Facebook Messenger. This enables neighbors, friends and family to help each other out in case of an emergency, increasing quality of life and ultimately bringing down damages incurred by the insurer, housing corporations and residents.
But entering this market is not simple or easy.
Join me next week as I look at the key challenges for insurers and how they can begin to address them.