Smart home technology may provide insurance benefits
May 27, 2016
Smart home technology could change home insurance for the better.
Smart home technology is increasing very quickly in popularity. According to a March 2016 study conducted by August Home and Xfinity Home, the U.S. market is expected to double in the next 12 months, meaning by this time next year smart home technology should be present in 30 million homes. The survey found the most popular smart home products to be a connected camera and a video doorbell, with family safety and convenience being the two largest reasons motivating people to adopt smart home technology.
A January survey from Coldwell Banker stated that 2016 will be the year smart home technology becomes mainstream, reporting that 45 percent of Americans either already own some sort of smart home technology or plan to purchase some this year.
Those who adopt smart home technology may find they reap more than the added convenience and safety the products provide. Increasingly, home insurance companies are offering discounts and benefits to those who have smart home products. Additionally, the technology used for smart home products might prove useful to insurance companies.
" Some insurance companies already offer rewards to homeowners who have smart devices in their homes.”
The future of home insurance and smart home products
According to Digital Trends, there are already insurance companies that offer rewards to homeowners who have smart devices installed in their homes. There are even certain partnerships that allow homeowners working with specific insurance companies to receive discounts on smart home products in addition to a discount on insurance.
Research conducted by Cognizant revealed that property and casualty insurers may also be able to reap the benefits of smart home technology to create better insurance packages for customers. The IT company believes the influx of data from smart devices can help insurance companies create more personalized products and services, make improvements to their underwriting processes, decrease and mitigate losses and create an overall upgraded digital experience for customers.
Cognizant explained that the onset of smart home technology has come at a time when insurers are struggling to find a way to differentiate themselves from competitors and continue to be profitable. It seems smart home products may be the key.
There are still many challenges associated with the technology that insurance companies will need to be prepared to tackle. For one, they will need to gain access to all of this data. Beyond that, the industry does not currently have standardized communication regulations, and insurance companies will also have to find a way to use this data while simultaneously protecting consumers' privacy. In a world constantly ravaged by cybersecurity breaches, this will prove to be difficult.
Cognizant recommended a process for home insurance carriers to adopt smart home technology in three phases: examine, enter and enhance. Carriers should start by learning everything they can about potential partners and define a strategy and implementation roadmap. Then, they should create partnerships, underwriting and pricing guidelines and begin implementing changes to their target operating model. Finally, they will need to regularly evaluate what is and is not working and make changes as needed.