Improving data collection through smart home devices

Consumers have more smart devices in their homes than ever before, yet insurers aren’t really making the most of this connected opportunity

If you happen to be working from home today, chances are you’re surrounded by connected smart devices. From the smartwatch on your wrist to the smart speaker in the corner of your living room, these devices have enjoyed such widespread proliferation in recent years that around 70% of US households are now predicted to own at least one smart device.

Part of this was due to the so-called ‘COVID effect’, with consumers locked up at home embracing smart home devices to help them with chores and make life a little more connected.

In fact, according to Deloitte, the number of connected devices in American homes more than doubled during the pandemic. Deloitte surveyed more than 2,000 consumers in March 2021 and found that the average US home had 25 connected devices – up from 11 in 2019.

Could insurers better utilise smart home devices?

The growing number of connected devices in our homes raises the obvious question about whether insurers could better utilise these devices to track user behaviour, analyse risk, and warn consumers if there is a ‘black hole’ in their exposure. In turn, this would then reduce the cause for claims and protect insurers’ bottom lines, which they would be able to pass on to consumers in the form of lower annual premiums.

It’s not an unfamiliar topic; after all, health insurers have been encouraging consumers to use fitness trackers for the best part of a decade – even going so far as to give them away for free or at discounted prices to encourage healthier day-to-day living and reduce the likelihood of illness or disease caused by their lifestyle.

Indeed, fitness trackers are a great example of how to utilise new forms of data alongside traditional data across the lifecycle of a policy, according to Chris Royles, EMEA Field CTO at Cloudera. “By combining insight into a person’s lifestyle with more classical forms of data like medical records, insurers have a significantly better understanding of risks related to health and how this impacts life insurance,” Royles tells us. “Data is the driving force behind this real-time risk assessment, which is revolutionising the insurance industry."

Insurers have much more data at their disposal

The growing popularity of smart home devices clearly means that insurers have more data in total – and more sources of data – at their disposal. Daniel Cole, Senior Managing Director at digital transformation consultancy Publicis Sapient, believes that this influx of data creates an opportunity for insurers to devise new consumer propositions. 

“Fundamentally, there is an opportunity to leverage devices more, but the solutions need to align to where the peril/risk/price is being driven. Escape of water was an obvious one (and is now making traction). Theft could be next up, where integrated monitoring and alarm systems are democratising to the masses. 

“Having said that, the reality is insurers will need to think about how their propositions integrate with the solutions in the market, as it will likely only be at the high end that the premium for a given year will cover the cost of such solutions – or the propositions need to move from being single-year to multi-year policies. This shift might be more feasible in a post-pricing reform world – and also help insurers shift from being purely price/aggregator-led to more customer-centric risk management propositions. 

“It’s a big ‘if’ though, as price comparison websites still dominate new business flow, so insurers need to be thinking about the premium end or being more disruptive on renewal/cross-sell.”

The most popular smart tech among Americans

Smart TVs: 69%

In a survey of 900 consumers, the most common smart tech in US homes appears to be the smart TV, with almost 70% of respondents saying they have one.

Smart speakers: 45%

Smart lights: 32%

Smart doorbells: 29%

Smart thermostats: 25%

Source: Mortgage Cadence


Do consumers trust their insurers enough to share data?

So consumers have more smart devices in their home than ever. But are they actually willing to share data from those devices with their insurers? It all comes down to incentivisation and trust. 

Let’s start with incentivisation: according to market research company GlobalData, nearly 40% of consumers would grant insurers greater access to their smart devices if it meant getting something in return. The most popular incentive was, for obvious reasons, financial discounts on their insurance (65%), followed by helping to protect their home (51%).

In a cost-of-living crisis, sharing permissions with your insurer to help reduce the cost of your premiums is something that will inevitably appeal to cash-strapped consumers – but equally, some consumers will choose to de-prioritise insurance cover entirely, a much more pressing concern for insurers.

What about trust? Separate research from GlobalData, published in March, suggests that consumers are losing trust in big-tech companies to provide insurance products directly. When it comes to companies like Google, Amazon and Apple – the same companies that make some of the most popular smart devices in our homes – there was a notable reduction in interest, with consumers on average three percentage points less likely to consider purchasing insurance from an alternative provider than when GlobalData asked the same set of questions last year.

Indeed, as the number of smart home devices increases, so too, it seems, does the extent of mistrust. In a survey conducted by software company Mortgage Cadence, nearly three-quarters of Americans (73%) fear their smart home devices are spying on them. 

Newton’s third law of gravity states that every action has an equal and opposite reaction – and perhaps the increasing normalisation of these devices in our homes is ramping up the suspicion that consumers now have towards tech providers. This may have a residual effect on insurers themselves, particularly those keen on extracting more data from their customers’ smart home systems.

Distrust in insurers is growing too. In a survey of 10,000 financial services customers carried out by Forrester, many insurers achieved lower trust ratings than banks. In fact, of the US insurance companies that Forrester sought consumer opinion about, not one achieved better than a ‘moderate’ score – defined as a trustworthiness rating of more than 74 out of 100. This may prove to be a sign of our times; the opportunity exists for insurers to utilise connected devices in a smarter and more efficient way, but whether insured consumers have the confidence to allow it remains to be seen.


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