Of the 41 percent of Americans that are using smart home gadgets, the most popular devices include connected appliances (20 percent) smart thermostats (16 percent), smart home security (12 percent), and smart lighting (10 percent). While this technology is saving homeowners money on utility bills, it also has the potential to savings on liability insurance.
Smart Home Technology Offers Cost Savings to Insureds
Many insurance carriers are offering incentives in the form of premium discounts if homeowners are willing to share the data collected on their smart home devices. This data not only reveals if the property owner has precautions in place to minimize risk, but also shows if they’re actually using them.
For example, while insurance carriers have historically offered homeowners discounted insurance premiums for having an active alarm system, they had no way of knowing if the homeowner was actually using the system. A smart home security system changes the playing field, though, by letting insurance carriers know if the technology is actually being used. This information is valuable in the underwriting process as it helps insurance carriers to more accurately assess risk.
How Insurance Carriers are Using Smart Devices to Engage Insureds
Another advantage that smart home technology offers to insurance carriers is an opportunity to engage insureds and build brand loyalty. Historically, the insurance underwriting and procurement process has been very hands-off from the insured’s perspective. There has been little to no interaction between the insured and the insurance other than renewal time or if a claim needs to be filed. However, the Internet of Things (IoT) presents insurance carriers with an opportunity to engage customers and present them with tangible value when a policy is purchased.
For instance, fire and water can cause tremendous damage to a property, so getting insureds to think more about fire safety and leak prevention can add a lot of value. By having insureds install smart safety features that would automatically trigger a valve-shut off will prevent damage, mitigate loss, and offer immediate value to the customer. The data that these smart safety features offer could also allow insurance carriers to proactively dispatch service personnel to address potential issues before they become a problem.
Smart Homes Will Continue to Grow in 2018
As we move into 2018, we can expect more property owners to adopt the use of smart home gadgets. It’s projected that 52 percent of American households will utilize smart home devices by 2022, which shows healthy growth over the current 41 percent.
There’s no question smart home devices will allow insurance carriers to strengthen their underwriting practices. Combining the data that smart home gadgets provide with an in-person property inspection will help insurance carriers to more accurately underwrite risk and minimize losses.
Contact us at Insurance Risk Services to learn more about how we’re using technology to provide our insurance carrier partners with the most accurate underwriting support.