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

American Family Insurance also has an arrangement with Ring, a manufacturer of internet-connected doorbells that use an integrated motion sensor, a video camera and a two-way microphone to allow homeowners to view who is at their front door and speak with them via the mic even when not at home. American Family Insurance customers receive a $30 savings on the $200 doorbell and, in some cases, lowered rates, on the premise that the doorbell can discourage burglaries or at least provide a means of identifying the thief.

British insurer Aviva, which says repairing damage caused by water leaks accounts for more than one in five of its home insurance claims, is offering its customers a connected leak detector called the LeakBot, as part of a larger agreement between Aviva and HomeServe, the company that markets LeakBot. Under the terms of the agreement, Aviva underwrites the cost of the devices and HomeServe sells repair and maintenance services when the smart-home devices (which currently consist of LeakBot and a connected thermostat) indicate trouble.

In one case, a U.S. insurance company has purchased an IoT technology provider in order to bring its products and services in-house. While it is mainly focused on insuring heavy equipment used in industrial applications, Hartford Steam Boiler (owned by Munich Re), recently acquired Meshify, a Texas startup that makes sensor networks and applications for Industrial Internet of Things uses. Yet, Hartford Steam Boiler does have an insurance product focused on home technology systems, including residential electrical generation and distribution, heating and cooling, air and water filtration, central vacuum, home security systems and swimming pools. This product also offers coverage for appliances and home computer networks.

A press statement about the acquisition states that Hartford Steam Boiler will use Meshify's platform "to provide IoT based services for small and medium size businesses and business chains."

But about a week later, Hartford Steam Boiler, in partnership with digital security consultancy Prescient Solutions, hosted a security workshop in New York City, aimed at consumers who use smart-home devices. During the event, hackers working for Prescient perpetrated a remote cyber-attack on an internet-connected model home inside the claims-training facility operated in Ohio by American Modern Insurance Group, a U.S. company also owned by Munich Re.

The workshop's purpose was to highlight common vulnerabilities that nefarious parties could use to infiltrate a home's IoT network by leveraging vulnerabilities in smart-home products, and to then show consumers basic steps that they can take to protect their homes from such attacks. Given the spate of recent cyber-attacks that leveraged poorly secured IoT devices, including products used for smart-home applications, insurers will likely evaluate more closely the safeguards that any smart-home product company uses before entering into any future tests or partnerships.

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