There is no doubt that connected devices are the next big thing in the Internet of Things and in (re)insurance.
The global smart home market is expected to grow at a yearly rate of 14.5% between 2017 and 2022, according to a Zion market research report.
The insurance industry is figuring out ways to connect to this market because carriers see smart homes as a great way to engage with customers, increase their customer base, provide more value-added services, write more policies and improve their overall market brand.
How do customers feel? Spoiler alert: not exactly the same.
Nearly 80% of consumers surveyed worried about security of information, and 73% worried about privacy. There is also increased cost and complexity of installing these devices, and more interactions with service providers. 92% of consumers see the increased interaction as a negative.
Why the enthusiasm gap? And what can we do to bridge it?
Digging into the disconnect:
It is surprising to read the findings in the recent report published by NTTData on IoT Disruption and Opportunity in the U.S. Insurance industry.
-77% of carriers believe they really care about increasing the consumers' safety and security, whereas 26% of consumers believe that.
-84% of carriers think agents help consumers optimize coverage, whereas 21% of consumers think that.
-61% of consumers feel price was important, whereas only 41% of carriers feel that.
-22% of consumers are sold on the idea of smart homes compared to 55% of carriers who feel the same.
How can we bridge the gap?
Client engagement: Existing partnerships with security device providers give the carrier an opportunity to go meet the customer in person when the device is being installed and have a meaningful interaction. Meaningful interactions are a must. Maybe the industry develops an app where the customer can access his/her insurance policy on all their smart devices. And there could be links to recommended service providers for home repairs with electricians, plumbers, contractors, etc.
Interaction with agents: Not all customers value cost effectiveness over relationships. Some choose to stay with their current agent even when presented with a better offer simply due to an existing relationship. We must connect with these agents. They have a better relationship with the seeker and understand their buying behaviour, which can help get our message through and connect better.
Data security: Customers may be willing to share data and usage patterns from lights or smoke detectors but they may not be willing to use cameras. The potential for data misuse is worrisome to many. We have to find ways to convince the customer that data will be used for the benefit of the customer only, and not for other purposes like policy cancellation, increasing premiums, etc.
Focus on value-added services: So what kind of discounts are there for using smart devices? One thing that I learned during my conversations with agents is that protected homes do not fetch a great discount, at the max maybe $20 a month. One way to offset this is to focus more on value-added services. This might have the added benefit of getting millennials more interested.
Overall, I think we are headed in the right direction. However, we need to broaden our focus to various issues that are currently of key concern to consumers. When all parties involved work together, we can definitely reach our goal of a "smart community."