Homes around the world are getting more connected and the market for smart homes is growing rapidly – it’s grown by 33% every year since 2014 and shown no signs of slowing down.
Scott Newland, General Insurance Operations Manager at Gallagher Bassett believes that the data and technology brought together in modern “smart homes” won’t just impact the way people interact with their homes, but will have far-reaching effects for the insurance industry.
With Apple, Amazon and Google, recently launching their home personal assistants in the Australian market, there is a huge opportunity for insures and brokers to integrate smart technology into their offerings.
“For the insurance industry, smart home technology will have two main effects: firstly, with better data, products will now be tailored based on an individual customer’s needs and behaviours, and pitched based on their risks. Secondly, pricing models will change; real-time data will allow property insurers to increase or decrease premiums at set review points,” says Scott.
“The rapid increase of smart devices and sensors, and the vast amount of data this produces presents very real opportunities for property and casualty insurers to reduce and mitigate losses, improve underwriting and improve customer service through individualisation.”
A lot of consumers still don’t fully understand what connected-home devices are and how they work, and so demand hasn’t reached its full potential. However, adoption and awareness is still high for such a new category.
To take full advantage of the opportunities presented by smart homes, insurers will need to address key challenges, such as data management, privacy concerns and fully integrating this type of technology into their claims management processes, however if they can do so the potential rewards are rich.
“At the moment property insurers and brokers are facing a double-edged sword, where there’s increasing pressure to provide greater differentiation from competitors, while also reducing costs”, says Scott.
“Because smart technology provides an opportunity to better tailor services, while simultaneously managing risk in a way that reduces cost the opportunity for the insurance industry is massive”.
Brokers who understand the risks and opportunities associated with this growing segment early on will be well-placed to provide invaluable advice later.