The convenience and security offered by smart home technology cannot be denied. If we invest in the right gadgets, our curtains will open themselves; our lights will turn themselves on and off; we will all be able to see who is at our front door when we’re not at home.
As these smart home solutions develop, adoption is increasing, albeit slowly. Some recent estimates suggest 26% adoption of smart home systems in UK households, although our latest LexisNexis Risk Solutions research* puts the figure at 30%, up from 25% in 2016.
The cost of smart home devices is still the biggest barrier to adoption (for 45% of households), but like any new technology, prices will fall and as they do, take-up will increase.
However, if insurance providers get involved and encourage their customers to take the step and invest, adoption may happen far more quickly. This means the insurance sector could start to benefit from the smart home on a much wider scale, both in terms of risk mitigation and in building a clearer picture of the customer’s risk based on their smart home data.
It may take some leaps of faith but the good news is that many consumers are already open to the idea of connecting their home with their home insurance.
Influential insurance providers
Our LexisNexis Risk Solutions research* showed that 45% of homeowners would be willing to join the smart home revolution, if prompted to do so by their home insurance provider. In fact, respondents said a recommendation from their home insurance provider would have more influence over them than a recommendation from friends and family.
When asked about the main benefits of connected home technologies, over half of the homeowners surveyed saw significant benefits in making their home safer, lowering their insurance costs and utility bills, as well as reducing the damage caused by fire and water. Notably, the top benefits are detecting or notifying the owner of a fire or intruders.
While almost half of the homeowners in our research were undecided about whether they would be likely to adopt insurance packaged with connected home technology, if it were offered, well over a third (37%) confirmed they ‘definitely’ or ‘probably’ would purchase this type of packaged insurance.
For insurance providers to capitalise on the positive attitudes to smart home technology, and the latent demand from consumers for home insurance linked to the smart home, incentivising them to adopt the technology seems to be the logical next step. We are starting to see this happen in insurer and technology provider partnerships, with Aviva taking a majority stake in Neos for example, but it’s still early days.
With more home insurance providers offering incentives such as premium discounts when smart home devices are present, we will build a greater understanding of the impact of smart home technology on claims which can then be used within the risk assessment process.
We have proven the benefits of data sharing in motor insurance and the risk mitigation benefits of telematics-based insurance. Smart home data is a different ball-game, as the commercials simply don’t stack up in the same way. However, with those leaps of faith continuing and technology costs falling, smart home data volumes will grow. This will help shape the connected home insurance propositions that, based on our research, many consumers want.
*This report examined consumer behaviour and attitudes in this market, as they search for a provider they can trust, looking at how and where consumers buy home insurance. To discover these details, LexisNexis Risk Solutions commissioned a survey of 1,500 UK homeowners who had owned their current residence for two or more years and were equally or solely responsible for home insurance decisions. LexisNexis Risk Solutions was not identified as the sponsor of this research, which was completed during January 2018.
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