How Residential Insurers Are Approaching the IoT

Internet of Things technology is set to deeply impact every type of insurance product and all categories of insurers. Here, we survey how and why residential insurance providers are looking to leverage smart-home products.
By Mary Catherine O'Connor
Nov 03, 2016

Auto insurers have spent years testing and evaluating the use of connected-car technologies to better understand drivers' habits in order to more accurately measure actuarial risks. But more recently, interest in the IoT has spread across the insurance industry, and IoT platform providers have begun courting insurance providers of all stripes, in the hopes that they, too, will find value in IoT-enabled data collection.

A 2015 report from Accenture found that 80 percent of insurance providers in Europe, the Americas, South Africa and Japan believe that the Internet of Things will disrupt their industry. So where and how is the industry approaching IoT deployment?

Ring's internet-connected doorbell
In the United Kingdom, the startup Neos is selling smart-home equipment—an internet-connected alarm system, an IP camera, and connected flood and fire sensors, paired with a mobile app that alerts homeowners to an event such as a break-in or fire—as well as customer service and, through a partnership with insurer Hiscox, a home insurance policy. Neos recently completed beta tests in homes across Great Britain, and just announced £1 million ($1.2 million) in seed funding.

But rather than launch their own insurance services, some IoT platform and service providers are looking to provide smart-home products paired with customer services under white-label arrangements.

"A year ago, we were looking at smart-home products and the challenges [of programming and networking them]," says Curt Schacker, the EVP of connected products at IoT platform provider EVRYTHNG. Finding that managing smart-home devices still requires a great deal of effort and computing acumen on the part of consumers, Schacker and his colleagues concluded that consumers would embrace the idea of an outside service provider stepping in and demystifying the technology.

"Insurance companies have a great deal to gain from using devices that track leaks, poisonous gas, a garage door or window left open," Schacker says. "These [events] often turn into claims that [home] insurers have to pay." If insurers can gain access to data being generated from sensors installed within a home, such as internet-connected carbon monoxide detectors, water leak sensors and smoke alarms, then those insurers could assume a sort of digital guardian role by taking actions—such as calling policyholders or dispatching emergency services—in the event of a mishap.

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