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

Last month, EVRYTHNG began offering providers of residential insurance what it calls an IoT Insurance Pilot Kit, which includes internet-connected fire, water leak and security sensors, as well as a smart-home hub that connects to all of those sensors and uploads data to EVRYTHING's cloud-based platform. The kit also comes with a mobile app and a web-based interface that consumers can use to monitor and manage the devices. The insurer would access the cloud-based platform and use it to monitor the health and security of the policyholder's home, based on the sensor data, and communicate with the policyholder if the data indicates an emergency situation or a problem—a leaky hot water tank, for instance. Essentially, the kit is designed to be a white-labeled, end-to-end smart-home solution offered by the insurance company.

Early conversations with insurers have been promising, Schacker says, and some are considering running pilot programs to leverage the starter kit, though he cannot yet share any specific information regarding timelines or companies. But he does say that insurers tend to be aligned around one particular use case: leak detection.

EVRYTHING's Curt Schacker
"Leak detection is becoming what the connected fridge was to the early days of smart home," Schacker explains, calling it "kind of the killer app, because domestic water does damage over a long period of time." The damage, he says, is difficult to detect until it has resulted in sometimes sizable claims. Domestic water refers to water supplied to a home via its plumbing system, as opposed to water that might enter a home due to a flood, hurricane or other natural disaster.

EVRYTHING is not the only IoT platform provider that is wooing home insurers on this white-label approach. Last February, ROC-Connect launched a product called ROC-Master that is similar to EVRYTHING's new offering, in that it is a white-labeled product based on a smart-home hub and a managed service and smartphone app. But with ROC-Master, the prospective insurer needs to provide its customers with a suite of smart-home devices, such as leak detectors, connected fire alarms and home-security devices, that work with the hub device. When it announced the offering, ROC-Connect said it was already involved in pilot programs, but no customers have been revealed during the intervening months. According to a company spokesperson, ROC-Connect is currently in discussions with an insurer based in the United Kingdom about offering ROC-Master to its customers.

Yesterday, ROC-Connect announced its latest product, called Home Safety Kit, targeted at insurers. This product kits together internet-connected fire and water sensors, made by Ozum (which is ROC-Connect's brand) with the ROC-Master hub and managed service and app. The new product also includes what ROC-Connect calls a Home Safety Scorecard. This service, made possible through a collaboration with global property data and analytics service CoreLogic, uses a house's size, location and features (data provided by CoreLogic) to create a risk profile for the home that is then combined with customer behavior data, pulled from the connected smart-home devices, in order to generate a customized safety scorecard. This is designed to help the homeowner mitigate risks by modifying behaviors and ensuring that the home's appliances, plumping and air-conditioning systems are in good working order.

In other cases, manufacturers of connected devices for the home are reaching out directly to insurers. In Germany, the insurer Allianz offers a special home insurance policy in collaboration with Panasonic that integrates a home-security service with leak detection, based on Panasonic's Smart Home system. Nest has partnerships with American Family Insurance and Liberty Mutual, through which policyholders in the United States receive a free Nest Protect smoke and carbon monoxide alarm, to which the insurer connects via the internet in order to confirm that the policyholder has a functioning detector. In some cases, the insurers also offer these customers discounted insurance rates.

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