Perspectives From a Smart Home Owner: How Insurers Can Help

Every property insurer must be actively engaged and following the developments in the smart home/property area and must maintain an ongoing conversation with agents and policyholders about their needs.

(Image source: Pixabay.)

There have been so many great advances in the area of smart homes and buildings, it makes me wonder about the extent of its impact so far—and about what I might have had to deal with as a homeowner in the absence of the “smart” features with which my home is equipped. The “smart” concept is to be able to secure a building with sensors that can provide safety features and collect information to reduce the risk of water damage, fire damage, or other hazards.

When recently building a second home, I chose to make it smart and connected in as many ways as possible. My experience has been that I am generally more aware of all aspects of my home than I would in a non-smart structure. I receive mobile alerts when there is motion on my front porch. I know the temperature in all areas of the house. Water sensor devices provide peace of mind in knowing that there have been no water leaks—and if there is a leak, the sensors are connected to the auto shut-off valve in the basement. The SimpliSafe security system is connected to fire and police through the connected security system and fire alarm. In essence, I know the health of my home at all times—which has been very handy to the owner of a second home.

Source: SMA. (Click to enlarge.)

From the homeowner’s viewpoint, I can see the value benefits for an insurance carrier. My insurer worked with me by providing a premium discount. The process was interesting: to obtain the discount, we correlated the capabilities of new devices we installed to the older discount program that was in already place.

A connected home can be considered an asset both in the sense that it has early detection and prevention capabilities and also that it is being actively managed. However, several barriers need to be overcome. The property owner needs education and access to the combination of devices that can assist with the management of the home or building. To address this, many insurers have ventured into partnerships with companies such as Amazon (Travelers) and Roost (Aviva and Erie) to name a few. But there are big challenges involved here: How do you increase the knowledge of millions of policy holders or commercial property owners? And, how do you make available the key connected devices that can, at a minimum, detect water and fire to mitigate the risk of each?

In our most recent report, Smart Homes and Buildings: Ten Strategic Considerations for Insurers, we discuss the key considerations for insurers when developing the best value propositions, including the need to develop a deep understanding of specific customer segments, their needs, and their adoption of smart devices. For some, it may still be a few years away; for other insurers and customer segments, the time to engage in this area is now. For example, insurers that focus on segments such as second homes, vacant homes, or specific types of commercial properties should be actively developing strategies now. But every insurer that writes property insurance must be actively engaged and following the developments in the smart home/property area. And they must maintain an ongoing conversation with agents and policyholders about their needs.

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Karen Furtado // Karen Furtado, a Partner at Boston-based research and advisory firm SMA, has an exceptional understanding of core systems in insurance and the transformations required to achieve success. Her expertise is comprehensive—policy administration, rating, product configuration, billing, and claims—and is combined with a deep understanding of how to integrate mature and emerging technologies with core systems. Those seeking an edge in today’s highly competitive world turn to Karen to capitalize on her unparalleled knowledge and experience in connecting solutions to business and IT requirements.

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