Data-driven opportunities in Smart Home for Insurers – Verisk Report
Article Synopsis :
Beyond connected car insurance, connected homes are the logical next frontier in the IoT-driven productisation journey for insurers.
“Data-driven opportunities in the Smart Home” from Verisk Analytics explains how a convergence of smart-home trends creates a new market niche for insurers willing to take the plunge and innovate. The report also addresses smart-home device integration, as well as data, regulatory and privacy concerns.
IoT can be applied to the entire insurance value chain, with targeted data-driven strategies for each link, from marketing and customer engagement through claims:
The connected-home market is evolving rapidly, expected to reach $110b-$120b by 2019, up from just $60b in 2015. In North America connected-home penetration is expected to reach 28% of households by the end of a decade. Some of the reasons for this growth include:security concerns, energy management, automation and entertainment. Insurers are pursuing this opportunity with targeted research programs aimed at patentable IP, proofs-of-concept, and partnerships and investments in InsurTechs.
IoT and connected-home services raise major concerns about security and privacy. Regulations are evolving, especially in the area of what is and isn’t considered “private” data. The major business opportunities for insurers include increased product (and pricing) sophistication and predictive analysis. A major challenge with IoT and connected-home offerings is processing huge volumes of unstructured data and understanding data coming from different IoT providers and sources. Third-party intermediaries can help bring IoT providers and insurers onto a common platform, leveraging the art of the technology.
Five key takeaways identified in the report are:
- IoT creates consumer benefits extending beyond insurance, so seek out the intersections.
- Because of the complexities and the threat of adverse selection, get involved early.
- The market is evolving faster than insurers are entering the space, and many will have difficulty catching up.
- Seek partnerships providing access to the greatest variety and volume of data.
- Start with simple uses of IoT data and expand as the market grows.
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Digital Insurer's CommentsLooking back on the many reports we’ve reviewed on the connected home, just about all of them have focused on cost aspects, specifically energy efficiency and insurance/claims/loss-prevention. But with the explosion of ‘tap and ask’ home offerings from Amazon (Alexa), Google (Home), and Apple (Siri), the entertainment angle enters the frame, driving connected-home adoption rates, especially with younger users.
Of course, ‘tap and ask’ is the digital native’s ‘tap and tell’. All that user data accumulates and profiles emerge. As the connected-home insurance market evolves, digital natives are acquiring more and more data from the home enabling truly disruptive insurance products in future.
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