In my last blog post I discussed how consumers around the world are looking at the Internet of Things (IoT) and what they want from connected home products and services.
Today I will examine how the IoT will change the insurance industry, and what we can do to prepare for the onslaught of opportunity (and risk!) that will accompany this transformation.
Based on our research and client projects we are working on, I believe the rapid development of IoT will disrupt the core of our business on three levels:
- The consumer. The advance of the IoT will recondition customers to expect a unique, always-on, service-oriented insurance experience.
- The products and offerings. To meet the changing needs of customers, insurers will need to develop new offerings across three combined layers: product, technology and service.
- The eco-system of partners.
- The competition. New competitors from unexpected industries are already creating contestable markets, as the boundaries between these industries are fading.
As we saw in my previous blog that Italian consumers are keener than many other Europeans to buy connected home insurance, I found it interesting to look at how insurers are responding and introducing new IoT offerings. And indeed, there are very interesting connected insurance offerings already on the Italian market
aCasaConMe is Banca Intesa’s recently launched home insurance offering. It combines fairly traditional features, a wide range of 24/7 assistance support, and an innovative connected home solution. The offering is fully web enabled and the client can buy standard coverage, include the connected insurance solution, or buy the connected solution itself. The connected home solution is scalable and customizable. A range of devices can be connected to a home box, including safety detectors (flooding, spread of smoke) and security detectors (intrusion of thieves. The number and type of detectors are customizable by the client and the solution is scalable from home to health protection in the future.
Although not all clients choose the connected home extension, this product clearly differentiates Banca Intesa on the market.
Habit@t by BNPP-Cardif, launched in 2014, is another interesting example of connected home insurance product. Habit@t is the company’s first online home insurance product. The contract can be totally signed online. Customers then receive an electronic device (Homebox) that allows them to monitor their home and receive timely help in case of danger or urgent repairs. A mobile app allows customers to check Homebox operations such as sensors installed in the house, battery consumption of sensors, history of all alarm signals of individual devices, request for intervention by the service center.
As you can see from the examples above, the technology components are now available at rapidly decreasing cost, allowing insurers to go beyond insurance (see our recently published report) in many new ways to provide what we call Living Services–services that are part of customers’ daily life and increasingly combine data, connected devices and mobile in unique new ways (see Living things report from Fjord.
But to deliver on this promise of becoming “insurer of things,” insurers must first adapt by extending the entire value chain and reshaping their existing business models. Choosing which role to play—whether it’s value provider or aggregator—is key to playing the game for each market.
Next week I’ll look at further a how insurers are adapting to the new realities of the connected home with creative partnerships and customer-driven products and services.
Other papers on the topic that you might find useful: