How much loyalty do you have to your home insurance company? Many of the same people interested in smart-home tech aren’t very loyal to their carriers, and as a result, home insurance companies are trying to deal with at-home IoT tech in consumer policies, reports Insurance Business.
Despite a lack of evidence that smart-home monitoring and alert devices actually result in differences that could reduce claims, insurers are responding to market pressure for lower premiums. As homeowners rush to buy Amazon Echo and Google Home devices, considered by carriers to be smart-home “gateway drugs,” insurers see a potential market disruption, based on a study by NTT Data. The report surveyed home insurance carriers and found that 77 percent of those surveyed said they were “ramping up IoT initiatives” and 59 percent stated they were making “strong progress” in adding smart-home tech to coverage.
Granted that “ramping up” and “strong progress” are not at all specific, but the carrier responses give a clear indication that the increased interest in smart-home tech has insurers looking over their shoulders.
“We know that there aren’t that many products already out there, so these are initiatives designed to get them into the game,” said NTT Data’s insurance data and analytics lead Normand Lepine. “We believe a lot of what’s going on right now is around strategy, potentially infrastructure. There are still a lot of challenges and they (carriers) know that. Until they really understand how this is going to be beneficial, they’re still going to go slowly.”
If insurers move too slowly, however, the risk they face to their own business is real. Lepine reported that despite insurers wanting to carefully study the effects of smart-home tech on losses and claims, consumers buying into the technology are looking for carriers to consider it in policies.
“More importantly, we found there is a very large [number] of consumers who are willing to invest in it, but that same group are not very loyal to carriers.” Lepine said.
Lepine referred to a study aptly titled Disruption and Opportunity in the Insurance Industry. That study labeled 64 percent of the people who responded as “seekers,” meaning they aren’t loyal to their insurance companies and will switch for lower prices or policies that allow the customization they want. Those same consumers often have switched carriers previously. The report further said that the “seekers,” typically young and tech savvy, aren’t happy with their current policies and are primed to switch to carriers who offer smart-home programs.
Perhaps the greatest threat seen by the insurance industry is that the insurance “seekers” don’t have concerns about considering home insurance policies from other types of companies such as Apple, GE, or Samsung, Insurance Business reported.
Insurance Business didn’t mention Amazon or Google as potential deep-pocket players who could have vested interests in providing home insurance policies that favor smart homes, but surely that must cross the carriers’ minds as well.