Smart home devices are becoming increasingly commonplace as consumers realize the value of installing internet-connected technology that gives them greater control of their homes. Internet of Things (IoT) devices like connected cameras, thermostats and washing machines provide real-time data that enable homeowners to monitor what’s happening in their properties at all times.
A smart home setup is crucial to helping prevent burglaries or damage like fires and water leaks. It also offers significant benefits to insurance carriers, which can use that information to understand the cause of events and reduce the number of claims and the cost of losses.
As smart home trends evolve, the insurance market needs to reflect these changes. For example, 64% of consumers said they’ve put off buying smart home devices because they’re too expensive, according to Toluna research. Therefore, the onus is on property and casualty (P&C) insurance carriers and technology providers to keep up with changes in the industry and make technology readily available and affordable for consumers. Here are a few key trends to watch in 2022.
Consumer Adoption of Smart Property Tech Will Continue Increasing
The last two years have seen people become increasingly comfortable working remotely and, consequently, spending more time in their homes. As a result, they’ve committed to improving their homes and become more digital-savvy. People are now happy to hold online meetings, share data securely and have online interactions like telehealth all from their spare room or living room.
Homeowners are also increasingly aware of the benefits of new digital technologies, including home automation products, digital assistants and smart speakers. For example, analyst house IDC’s smart home trends prediction suggests worldwide device shipments will reach 1.4 billion by 2025, which represents a 12.2% annual growth rate over five years.
This growing technological know-how is coupled with consumers reviewing their finances and keeping a tighter lid on potential investments as they prepare for inflation. As a result, consumers will increasingly be on the lookout for new technology that improves their quality of home life. But they’ll also be keen to discover deals that keep this convenience cost-effective.
Interoperability Will Be Key
As smart home trends increase, ensuring connected devices can easily communicate and work together will be crucial. This interoperability is essential to minimizing complexity, preventing user confusion and making homes as safe and smart as possible. Data also needs to flow easily between devices and apps so insurance carriers can access and assess data in real time.
For example, Notion’s Integrations feature helps customers to protect their homes at all times by ensuring their devices and services talk to each other. It works with If This Then That (ITTT) to issue phone calls or text messages when devices detect smoke, a carbon monoxide alarm or an open door or window. And it works with HomeAdvisor to instantly connect homeowners to a plumber when devices detect a water leak.
Improved interoperability also is being addressed by Matter, a smart home protocol that enables devices to communicate and share capabilities. The upcoming standard aims to collate insight from devices across the home to make homeowners’ lives easier and limit the chance of disasters.
Carriers Will Need To Focus on Customer Churn
As customers become more digital-savvy and financially focused, they will increasingly look for the best deal possible from a growing marketplace of technology providers and insurance carriers. As a result, carriers can’t afford to provide outdated interfaces or poor user experiences. Instead, they must devise new approaches that attract new customers and build trust and engagement to encourage them to stay.
For example, smart devices can provide homeowners with access to real-time footage of what’s happening in their home and information about energy usage and immediate risks of fire or water leaks. Insurance carriers can use this data to simplify and speed up claims by integrating their offerings and policies with smart home devices.
Carriers are also likely to be affected by mitigating factors like climate change, which is increasingly causing extreme weather events that create a higher risk of insurance losses. For example, outages on the Texas power grid were caused by being “woefully unprepared” for winter weather, and an unprecedented number of hurricanes and storms are predicted to continue through 2022.
As the landscape continues to shift, carriers need to make it easy for customers to join and stay by pairing insurance and smart home devices.
Supply Chain Issues Will Continue
Shortages in computer chip supplies are likely to affect the cost of materials and the availability of smart home devices for the foreseeable future. As a result, the price homeowners pay for new DIY home security tools will likely increase through 2022. This puts further emphasis on carriers making smart home insurance available to consumers at lower price points.
In fact, a recent study by Nationwide reported that 64% of consumers would be more likely to buy smart home devices if they received insurance discounts. We’re already seeing savvy carriers reap the benefit of working with technology providers by offering discounted IoT and insurance packages. Others are rewarding customers who install smart devices by reducing their premiums or offering subsidized smart home insurance packages.
In 2022, The Pressure Will Be On
Pressure is mounting on insurance carriers as ongoing questions around COVID-19, business growth and investment, and inflation increase consumer uncertainty. As a result, budgets are harder to spend, and it’s more challenging to prove the value of models.
Installing smart devices in homes is a win-win for all parties. Homeowners gain the peace of mind that their property is safe and secure even when no one is there. Insurance carriers get access to real-time data that helps them understand the context behind claims and drive down losses.
For example, customers who install a Notion kit report a 10% reduction in losses, and those who keep their kits online enjoy up to 20% reductions. This is seeing installation rates increase, with insurance carriers now reporting that at least 75% of their customers are installing new sensors. With the upcoming release of Notion PRO, even more opportunities for loss reduction will be available for consumers.
It’s now critical for insurance carriers to work with technology providers to prove the value of smart home insurance to homeowners. Those that do will enjoy more robust relationships with customers amid increasing uncertainty through 2022.
Discover the benefits of a smart home insurance program by partnering with Notion.