EXCLUSIVE Andrew Hobbs reports from our Internet of Insurance 2018 event in London, as British Gas Insurance CEO Ed Dutton calls for a new approach to the connected home.
Over half of European homes will have connected home devices by 2020. As a result, there’s a huge opportunity for insurers to capitalise on these new data streams to inform their products and better understand their customers.
Ed Dutton believes insurance providers should approach the space not from an insurance-first perspective, but instead focus on a new proposition that gives customers peace of mind. Only then will the cost of adopting smart home devices be justifiable, he said onstage at the event.
The cameras and sensors that are increasingly filling our homes not only reduce the risk of burglary, fire, and leak damage, but also allow parents to know whether their children are safely at home, and that their pets are behaving themselves. Even existing ‘dumb’ devices, such as fire alarms, can now be listened to by connected appliances and made smart, he said.
In the case of British Gas, its BoilerIQ technology enables connected boilers that can predict faults, inform engineers of what replacement parts are needed, and re-pressurise the system – reducing downtime and customer stress, and helping engineers to fix problems on the first visit.
While the British public is generally comfortable controlling thermostats from their smartphones, only half are comfortable with the concept of their fridge monitoring its contents, he said. Even fewer – 35 percent – are comfortable with devices that operate independently without authorisation, such as by ordering replacement or fresh products.
This may be partly because such a process may lack transparency and auditability, and could be open to abuse by providers.
This sliding scale of support indicates that a period of transition lies ahead, during which people will go from seeing Internet of Things (IoT) devices as a means of giving them more control, to a network that requires less personal intervention from them – anticipating their needs, changing room temperatures, and ordering products as required, he said.
For its part, the insurance industry is increasingly excited about the connected home, added Dutton. Most people, when asked whether they would invest in connected home technology to make their home insurance cheaper, said yes – a change in the market that also reduces risk to the insurers themselves.
However, insurers should approach the opportunity by focusing not on insurance but on the peace of mind that such devices can bring to homeowners, he explained. This is because the cost of IoT devices isn’t going to offset the relatively small reduction in policy costs.
There are hurdles around collaboration and data privacy to overcome too, he suggested. For example, some technology providers, such as Nest, forbid the use of open API data for insurance purposes.
While there are standards that enable devices from different brands to operate from a central app, there is no such platform that allows insurers to access data from multiple devices, nor the terms and conditions to facilitate one. Dutton called for tech providers to liaise with insurers to better serve the customer in this area.
When it comes to its own products, British Gas has invested heavily in its Hive ecosystem of connected lights, leak detectors, heating kits, sensors, and cameras, and this makes it well placed to feed data from these devices into its own insurance products, as well as to make pricing more accurate going forward.
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Automatic leak detection has increased the company’s claims massively. When service providers alert customers to minor issues such as dripping taps and other leaky components, they are, in a sense, doing the opposite of creating peace of mind – even if customers’ property becomes safer.
However, Dutton rightly identifies the need to go a step further, by recognising the service need that this creates. By identifying problems, insurers then need to service them.
For the connected home to be of real value to the insurance space and to consumers, providers must go beyond sensors and control mechanisms to offer improvements to the repair and protection services that really make customers’ lives easier. Only then can insurers do what they do best: provide that elusive ‘feel good’ factor, and the sense that the customer is fully protected.