Smart Homes + Insurance = Perfect Match
Smart home technologies that monitor consumer activities, and keep track of critical property and home conditions, are providing insurance carriers with exciting new opportunities for customer acquisition and engagement. Thanks to smart homes, insurance companies can now offer personalized products to their customers. while at the same time making their own underwriting more efficient.
Traditionally, insurance products have been priced according to the level of risk against loss. Thanks to accessible smart home technologies such as locks, cameras, lighting, climate and water sensors, consumers are now able to proactively reduce risks that result in claims. As a result, the pricing paradigm for residential and property insurance has shifted from risk assessment to pre-emptive loss prevention.
Interoperable Z-Wave technology is the great enabler in this transformation of one of our oldest industries. Z-Wave is the overwhelming protocol of choice (90%+) for the US security industry, and home security is a foundation of the new home insurance. The
Z-Wave ecosystem includes devices of every kind to keep home and property safe, and to reduce the number and severity of insurance claims and losses.
How do smart homes make insurance better?
Pre-Empts Catastrophic Events
Failure of a critical home system or appliance is a frequent cause of serious property and casualty claims. In fact, flooding is the #1 insurance claim in the US, and the difference between minor and catastrophic damage can be measured in minutes. What if we could know in advance whether a flood risk is likely, and be able to remotely stop the water system in the event of a plumbing failure?
An inexpensive humidity and flood sensor lets consumers (and their insurers) know if the moisture level in the basement or laundry room merits professional attention. In the event of trouble, the sensor can tell a smart valve to shut off the water supply, thus preventing a flood even if the consumer is away from home. Catastrophic damage is proactively prevented, and a major insurance claim is avoided.
Lets an Empty House Call For Help
Even the best smoke alarm is of little value when there’s no one around to hear it. With Z-Wave enabled smoke and CO2 detectors, homeowners and monitoring services (including insurance companies) receive immediate alerts to take appropriate action, even when the home is unoccupied. The detectors can trigger lights and cameras, allowing remote inspection and appropriate responses. Potential casualty damage can be mitigated.
In the event of a smoke or CO2 warning when the family is at home, the same smart
Z-Wave detectors can tell other Z-Wave controls to light the pathway and unlock doors for a safe evacuation, thus protecting people as well as property. With so many Baby Boomers remotely looking after elderly parents that are aging in their own homes, smart home technologies impact life insurance policies, as well as home insurance.
Reduces Incidents and Claims
US Alarm Industry Research and Educational Foundation data shows that 74% of burglaries are prevented by an alarm in place, and Z-Wave is proud to be the near-unanimous wireless protocol of the smart alarm industry. Smart home security systems make the odds against intrusion and loss even better, by ensuring secure conditions even when the homeowner is accidentally careless, or not home at all.
For example, most residential break-ins during the day, through the front door or the garage. Smart door locks and garage controls powered by Z-Wave remedy these kinds of consumer oversights. Moreover, homes that appear to be occupied and monitored are less likely to be broken into. Automated lighting scenes and inexpensive cameras make this easy. Fewer intrusions mean fewer losses and fewer claims.
Quantifies Risks and Personalizes Policies
Imagine residential underwriting powered by remote visualization of risk hazards, such as leaky roofs, mold encroachment, or other structural vulnerabilities. Imagine quantified knowledge of risk-increasing activity, such as parties or home playgrounds, and objective evidence of changes in risk, such as a new roommate or undeclared rentals. Smart homes powered by Z-Wave let insurance carriers get smarter too.
All these technologies benefit both the carrier and their customers. Thanks to smart home technologies, consumers can now actively control their own risk profiles, and expect customized policies that reflect their engagement. For years, insurers have offered discounts to safer drivers. Now they are also able to to offer personalized pricing for safer homeowners.
Z-Wave Creates New Opportunities for Insurers.
Green Fields for Customer Acquisition
Consumers — particularly younger, tech-savvy Millenials — clearly see the connection between active risk reduction and rewards through discounted insurance. Major insurance carriers are rising to the opportunity. More than 35% of consumers that are ready to shop for smart home products and services will consider their insurance company as the source, according to Strategy Analytics. Fortune magazine says that 45% of all insurers feel connected devices will be a driver of revenue growth over the next three years. And while 60% of Europe’s top insurers have connected car solutions, almost none has entered smart home, according to Roland Berger Strategy. Smart homes are the next big land grab for insurers.
Consumers Gladly Trade Data for Discounts
According to a recent Accenture study, 80% of consumers surveyed would switch insurers for more personalized services based on usage data. Nearly 90 percent of millennials say they are open to signing up for a “usage-based insurance” policy in exchange for discounts, compared with 74 percent for other age groups, according to the global risk advisor, Willis Towers Watson. Moreover, Millennials are twice as likely as the total population to have a smart home product installed in their residence, according to NPD research. Smart home technology helps insurers acquire these customers, and in the process, acquire invaluable activity data not only for the individual home, but also the block, the neighborhood and the city.
A New Level of Customer Engagement
Smart homes expand insurer’s CRM far beyond the initial sale. Rather than remaining a static vendor with fixed products and services, insurers and smart homes together create new touch-points of consumer engagement, allowing for a relationships that increase satisfaction and reduce customer churn. With smart home technology, insurers — either solely through their own services, or through partnerships with 3rd-party monitoring services — can control the consumer experience in a way never before possible, this incentivizing customers, and creating long-term attachments.
Three Flexible Business Models to Choose From
1) Smart Home Discounts
Entice new business, increase consumer engagement, and keep up with competitors through pricing incentives that reward customers for using risk-reducing smart home technologies in their home or rental.
2) Provider Partnerships
Join your insurance company with market-leading security and integrated technology vendors that provide products, installation and monitoring. Share consumer data without infrastructure commitment.
3) Your Own Branded Products
Easily deploy and maintain your own smart home products and services, and extend your brand into the customer’s home. Own the consumer data and control the entire customer experience.
New Efficiencies that Revolutionize Insurance
Get visualizations of physical hazards, know quantified frequency of morale hazards, see evidence of changes in risk.
Better Loss Prevention
Receive real-time information that pre-empts catastrophic events and mitigates losses from freezes, floods, mold, and structural vulnerabilities.
Better Claims Outcomes
Smart homes provide automated first-notification-of-loss, with data that helps determine claim causes, and improves adjudication.
Only the Z-Wave Ecosystem
Smart home solutions robust enough for the insurance industry require numerous types of products from different vendors to work together — as a seamless experience for both consumer and provider. Only Z-Wave offers a true cross-brand ecosystem of over 1700 smart home products, from over 400 companies.