If you think big data and “the Internet of Things” are still of very limited relevance to insurance carrier technology investment, you might want to watch the AT&T Digital Life commercial (embedded below). The home security and automation technology solution shows that we’re already living in a highly connected world that includes mass commercial application of remote sensing and control. The implications of that for insurance are huge.
In the ad, two young adults arrive at a rustic retreat where the parents await. It emerges that the kids have stopped by at the house prior to arriving at the cabin in the woods. “Did you leave the house in good shape?” asks the father, skeptically. “Yeah, of course!” replies the son. “Sure you did,” the father observes to no one in particular, as he uses his cell phone to check status and remotely turn off everything that he can see was left on – including several lights, a TV with a game on, and a running faucet.
Fascinating. But what does it have to do with insurance? Is AT&T selling insurance? Well, not yet, as far as I know. Perhaps they have a “Digital Life Insurance” product in their future, but the Digital Life service affirms the potential of remote sensing technology for P&C insurance, which could extend to a new focus on loss control for personal lines. The technology could not only enable fascinating directions for new products and means of accessing market share, but could also help to recast the policyholder/insurer relationship into a collaborative model resembling what exists today between large commercial accounts and their brokers or carriers.
Anything that can be remotely controlled for security purposes can be monitored for risk purposes. And who’s a better risk, someone with a system that monitors whether, for example, faucets are left on or someone who doesn’t?
The ad is also interesting as a commentary on non-traditional competition. Suddenly AT&T is in the home security business? Well, why not, if innovations have made that a remote communications-driven business? One has to ask what other business could benefit from the remote exchange of data. At a recent industry conference, Ernie Hursh of BOLT Solutions delivered a presentation titled “What if Amazon Sold Insurance,” which drew a large crowd driven, no doubt, by fear. Viewers of the AT&T ad should wonder what will happen if AT&T and similar companies realize the potential insurance applications of their communications and control infrastructure – and their existing distribution networks.