Insurers are advised to develop their own smart home devices in order to have full access to user data and reap more business benefits
Lately
insurance providers have partnered with smart home companies to offer plans bundled with smart home solutions, but insurers are advised to develop their own connected devices in order to have full access to user data and reap more business benefits, according to a Parks Associates whitepaper.
So far insurers are including smart products that are complementary to their services, such as
water leak sensors, fire detectors and
water and gas shut-off valves, while offering premium discounts for customers who adopt the smart devices. The IoT devices work in insurers’ advantage because they help to prevent home damages and therefore reduce claims.
But insurers will be able to reap even higher benefits from IoT devices if they can have access to user data, according to Parks Associates’ whitepaper Leveraging Smart Home and IoT for New Insurance Business Models. Insurers could offer their own branded smart home products by working with companies that offer white-label solutions.
Kevin Meagher, author of the whitepaper and Managing Director of EAS Consulting, suggested a twin-track approach to partner with smart home companies as well as creating their own solutions.
“Given the current state of the market and the number of devices already in play, insurers need to continue to consider affinity deals for smart home devices, but they should only do this when there are data sharing agreements in place with the partner,” Meagher said. This way, insurers will still have access to some data held by smart home companies.
However, insurers are advised to develop their own products when the time is right. “If the IoT and smart home proves truly disruptive, the best way to leverage the opportunities for revenue growth and defend against threats is to become a primary channel for smart home solutions,” Meagher added.
For insurance providers, offering a smart home solution “guarantees access to quality data from a large enough sample of their own customers to underpin their risk and pricing models,” says the Parks Associates whitepaper.
How user data helps
There are early movers testing new insurance business models. Among them is Allianz, which has launched Smart Home Protect that mimics the company’s car roadside assistance models.
Data has been proven valuable for companies providing car insurance. Sensors installed in a vehicle’s on-board diagnostics slots and smartphone collector apps record customer driving data automatically. Insurers can then review and analyze the aggregated data to create customized policies based on driving behavior.
Since drivers may also access the data, which gives them the opportunity to positively change driving behaviors, consequently reducing claims and benefiting insurers.
Tips for insurers
While deploying their own smart home solutions, insurers are advised not to focus on a narrow set of devices that focus on their needs, said Meagher. For example, flood and fire detectors are relevant in property protection, but only including these devices risks generating low consumer interest. Consumers want comprehensive solutions that include different types of connected devices, Meagher explained.
There are several companies offering turnkey solutions, making them good options for insurance carriers says the whitepaper. For example,
Resideo (Honeywell),
Alarm.com and Bosch offer comprehensive white-label solutions based on more traditional security propositions, while companies like Samsung’s SmartThings offer DIY-branded variants.
According to Parks Associates’ survey, consumers in the US and UK have higher interest in video monitoring cameras, smart smoke detector/CO detectors, smart lights, smart video doorbells and smart door locks. And insurers can consider including these devices as part of their security system offering.