As I mentioned in my previous post, disruption as a result of the Internet of Things (IoT)—the network of intelligent machines and devices that can sense and interact with each other over the Internet—offers an opportunity for insurers who act quickly. The Connected Home is a prime example.
Devices that automate, monitor and control individual homes are proliferating. These include a wide range of sensors, switches, web cams and thermostats that are turning homes into digitised environments.. In many homes, wireless control panels already enable a range of functions, including HVAC, lighting and security, and can be managed from inside or outside the home.
By 2016, the global Connected Home market is expected to reach $235 billion, with the largest revenue-generating segments including home security ($110 billion), smart utilities ($33 billion) and home entertainment ($68 billion). While this market is already large, it’s still in its early stages of growth.
Insurers exploring the Connected Home market are typically focused primarily on eight product areas: security, energy management, lighting, water, thermostats, weather, appliances, and smoke and fire detection and suppression systems. Before they enter the market, insurers must decide on their strategy for partnering across the ecosystem: should they partner with companies that already have specific technologies, do they partner with companies with specific customer relationships and propositions, or should they come to market with their own version of customer and technology solutions?
Within the Connected Home environment, Insurers can explore ways of offering policy discounts to customers who install security systems or home sensor systems to avoid or limit losses. For example:
- Using connections to in-home video cameras to perform digital inventories of the home’s contents, expediting claims filings and making it easier to remediate losses.
- Employing continuous monitoring through connected smoke alarm detectors and water leakage devices to enable quicker responses to issues.
- Working through utility companies, analysing energy consumption data and usage activity patterns to increase the sophistication of pricing liability and dwelling coverage.
- Encouraging beneficial customer behaviour pattern changes (such as locking the door, engaging the alarm, turning off the stove) through monitoring of in-home sensors.
- Increasing the effectiveness of fire monitoring and response systems.
- Automating inspection as part of regular preventive maintenance.
- Identifying causes of loss, particularly as they pertain to wind or flood damage.
For insurers contemplating a move into the Connected Home market—or an expansion of current initiatives—the path to success involves five key steps:
- Start with a vision of how to enter the Connected Home value chain based on a unique customer proposition.
- Experiment with concepts and technologies to test the value proposition of the chosen approach.
- Assess the Connected Home ecosystem to determine which partnerships to pursue.
- Test the approach through a pilot program and evaluate the impact the new program has on other areas of the company.
- Extend pilot lessons into new projects and consider new technologies as they emerge.
The Connected Home represents a tremendous opportunity for insurers. To convert that opportunity into profitable growth, insurers should invest carefully in concepts and partnerships that provide not just potential gains for themselves and their partner organisations, but real value for customers.
To learn more, register to download The Connected Home: New Opportunities for Property & Casualty Insurers