(Nest Protect device. Image source: Nest.)
The insurance industry’s adoption of Internet of Things (IoT) capabilities took another step forward with Liberty Mutual’s (Boston) launch of its Nest Safety Rewards offering as part of its Smart Home Verified Discount program. The program rewards policyholders who have installed a Nest Protect smoke and carbon monoxide alarm. The carrier will offer additional discounts for customers who electronically share data demonstrating that their smart home safety devices are functioning properly. Nest Safety Rewards will be available in six states as of next week.
Jamie Bisker, Senior Analyst, Aite Group.
The carrier describes the new rewards offering as an evolution of its Protective Devices program, which includes specific discounts for smart phone-enabled smoke alarms as well as new water and theft protection technologies. Through programs such as Nest Safety Rewards, customers can authorize their smart home provider to share basic information with Liberty Mutual Insurance to verify the devices are installed and working correctly. In the case of Nest Safety Rewards, Nest will tell Liberty Mutual once a month whether Nest Protect’s batteries are charged, its sensors are working and its Wi-Fi connection is good.
“These technologies provide the opportunity for consumers to reduce the chance of harm to their family and home by detecting events that trigger alerts on their smart-phones, wherever they may be,” comments Michael Robon, senior VP and Property Product manager, Liberty Mutual. “We believe customers seeking to monitor their homes with devices like Nest Protect demonstrate responsible behavior. As a result, we will be offering these customers reduced pricing on their home insurance policy. This not only provides better value for our customers, but also enables us to better understand how different technologies may reduce risk for our customers.”
(Related: Insurance and the Internet of Things: Google’s Nest Labs Acquisition)
Liberty Mutual reports that its Smart Home program will be available in Illinois, Kentucky, Pennsylvania, Alabama, Maine and Wisconsin as of June 22, with other states to follow later in the year. Nest also partners with American Family Insurance for customers in Minnesota.
“We’ve always known that Nest Protect is one of the best ways to keep families safe from fire and carbon monoxide, and now we’re excited to partner with Liberty Mutual Insurance to reward customers for being safe,” comments Ben Bixby, general manager of energy and enterprise, Nest.
Upward Trajectory of Insurance IoT
Liberty Mutual’s Nest Safety Rewards program represents an increasingly upward trajectory of the integration of technology and safety devices into the insurance ecosystem, according to Jamie Bisker, a Columbus, Ohio-based senior analyst at Aite Group, and author of the research firm’s new research note “Homeowners Insurance: Issuing a Policy in 15 Minutes.” The significance of the new Liberty Mutual program is that it heralds the use of ubiquitous cellular and Internet connectivity to allow carriers to operationalize information from their policyholders, Bisker says.
“In the past, having the safety devices present was an indication of decreased risk, but the working order of a fire extinguisher or a smoke detector was assumed to be at least nominal,” Bisker elaborates. “With modern connected and smart homes, individuals can contribute to the real-world data collection that carriers must do to correlate actions, devices, and changes to risk profiles.”
In the near term, more carriers will leverage smarter devices as part of the IoT to make better judgements of actual risk conditions as they determine pricing and discounts for homeowners and certain types of liability insurance, Bisker predicts.
Real-Time Coverages
“Going forward, there will be a type of sensor-fusion of data from various connected devices that range from phones and tablets—with a wide variety of their own sensors such as barometers, accelerometers, and thermometers—to basic household appliances that report cycles times, energy usage, and acoustic information,” Bisker prognosticates. “By pooling data and information from these devices, a broader picture of what is happening within a structure can be generated.”
This data will facilitate real-time coverages that will enable charging lower premiums for lower risks measured on an ongoing basis, Bisker predicts. “Dwelling insurance will be impacted much the same way as auto insurance has been due to UBI, and the upcoming impacts of autonomous vehicles will have,” he says. “Insurance will continue to be needed, but risk profiles and premium volumes will change.”