Insurers and homeowners don’t apparently smoke from the same end of the pipe. Research findings released today by NTT Data, a major global IT and business services provider, uncovered a major disconnect between home insurance company executives and their customers regarding IoT and smart home technology. The report is titled “IoT Disruption and Opportunity in the U.S. Insurance Industry,”
Insurance carriers see smart homes as a great way to engage with customers and build more personal relationships at the same time they write more policies. Customers don’t have nearly the same degree of enthusiasm. The gaps in perception about smart homes and insurance between carriers and customers, as shown in the study’s finding, are frankly astonishing. A summary of the research results states, “Carriers tend to have a Field of Dreams ‘if we build it they will come’ attitude about Smart Home programs.”
The numbers show the difference isn’t even close. In a question about how customers will feel about smart home insurance programs, carrier representatives believed that 55 percent of their customers would say, “It sounds great — sign me up!” However, less than one-third of the surveyed customers, only 16 percent, actually ticked that enthusiastic box.
Other figures showed additional gaps in perception that were equally serious. Carriers thought 72 percent of their customers feel protected by their homeowners’ policies, almost double the 37 percent of customers who felt that way. Also dismaying was the finding that while 77 percent of insurance carriers believe their customers think insurance companies really care about improving customers’ safety and security, a paltry 31 percent of surveyed customers agreed.
Many other hurdles are brought out in the full report, which you can download here. The findings divide Americans into two groups, the Seekers and the Keepers. The Seekers are millennials and the Keepers are everyone else. The Seekers are more tech-savvy and more likely to equip their homes with smart tech. However, that same group is also more likely to buy insurance based on cost than on relationships. The Keepers are less likely to buy smart home tech but they value relationships with their insurance agent more than policy cost.
Data is another big sticking point facing insurers as they attempt to expand their business by embracing smart home tech. In order to give the big policy premium breaks they see potentially possible with this technology, insurance companies will need access to the data. If you have burglar alarm systems, water leakage sensors, and electronic door locks, the companies want to know if you use them if they’re going to give you a price break. If you rarely turn on your alarm, and you rarely turn off your smart coffee pot, your insurance company isn’t going to be impressed.
Customers are concerned about security and privacy. They may not want insurance companies or anyone else to know what time they actually got home and how good a job they did parking the car in the garage.
Data is fraught with issues, not the least of which is how insurance companies will even access it. They assume there will be a central holding entity. Carriers also recognize the potential to lose their insurance business to nontraditional companies that are closer to the data, such as Apple, Google, and Amazon.
The NTT Data survey was taken in October 2016. The respondents included more than 1,000 U.S. homeowners and more than 100 insurance carrier executives who are directly involved in company decision-making, budgeting, strategy, and execution.
The great majority of carriers see IoT and smart home programs as a chance to improve customer relationships, attract new customers, and influence new insurance products and services. Their customers just aren’t on the same page.
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