Small business insurance has changed dramatically in just a few short years. Not only has the financial landscape shifted because of challenges like COVID-19, but businesses have also rapidly adapted to new technologies in the name of efficiency. Smart device monitoring in business is becoming the norm, and insurers who want to stay competitive are quickly picking up on these commercial smart monitoring trends.
In fact, the Internet of Things (IoT) and business go hand-in-hand. The use of smart property devices and the information they provide is one of the best ways small and medium-sized businesses (SMBs) can reduce cost — and it’s the best path forward for insurers who want to retain existing customers, reduce claims, decrease customer acquisition cost (CAC) and increase customer lifetime value (LTV).
To do this, insurers should get to work building smart property programs today — before the competition steps in. Let's look at the risk for SMBs and how insurers can work proactively to address them.
Property Risks for Businesses
Smart property technology is ideal for mitigating the biggest property risks SMBs face. The biggest of these risks are water and fire damage. Water damage happens with increasing frequency each year due to aging buildings and infrastructure. Claims for water damage continue to increase in severity because of rising repair costs, higher deductibles, and higher property rates. Today, the average water damage claim exceeds $11,000.
This damage can come from leaky roofs, overflowing toilets, faulty plumbing, and sprinklers. The latter can compound the damage already done by fires, which on their own accounted for an average annual loss of $16 billion in the 2010s.
In addition to fire and water damage, SMBs also need to be diligent about internal environment factors such as broken air conditioning or heating, as well as security factors. Loss can occur from theft, and shutdowns due to bad environmental control can wreak havoc on productivity. External environmental factors such as floods and extreme weather are also worth considering — and right smart property program can help mitigate damage and headaches down the road.
How Smart Devices Can Help Mitigate Property Damage
Smart property devices are the best way to prevent or reduce damage. Leak detectors can be installed in strategic areas such as beneath toilets or sinks, in utility rooms and kitchens, and in basements and attic spaces.
The use of leak detectors in these areas can alert business owners of potential problems long before they become claims. Door and safe monitors can be placed at entryways, on lockboxes or safes, and even on windows, interfacing with security systems.
Temperature monitoring, meanwhile, can not only increase the efficiency of environmental control, but it can also give businesses a heads-up when an air conditioner is having a problem or when a pipe freezes — before it causes severe damage.
Other Smart Property Benefits
IoT and business innovations like smart property devices open up a world of potential benefits for carriers and SMBs alike. Sensors do more than help mitigate damage. They can also mitigate risk and make the process of insuring a business more efficient.
Once a smart home monitoring system is installed, it’s easy to use that data to help businesses plan for preventive maintenance. Not to mention, if insurers are connected to this data, it provides an opportunity to create extra touchpoints with customers — an invaluable opportunity to create and maintain positive customer relationships.
In the traditional model, insurers didn’t take this kind of proactive approach. Instead of communicating with customers ahead of time, insurers would simply wait for big claims to come. The claim and renewal process were the only time a customer interacted with their insurance company, and those interactions were stressful.
With a smart property program in place, insurers can assess risk profiles, educate insureds on how to have peace of mind when they’re away from their businesses, and help mitigate issues when they occur so they don't become big headaches.
For example, when a Notion Sensor is used to detect water leaks. Integrations with HomeAdvisor can help Notion uses contact a plumber within the app and help fix the problem long before a claim is necessary. This is desirable to both carriers and consumers, as big claims are costly on both sides.
The byproduct of this kind of interaction and regular communication is trust and familiarity. Customers feel taken care of, and that means they stay around. They may even be willing to pay more for a level of service that gives them this peace of mind. Not to mention the obvious: Fewer claims mean customers cost less.
That leads to product stickiness, superior customer retention, and better LTV. Added to that, this kind of offering positions insurers as innovative and caring in an industry that is not often described that way. Word of that kind of standout service creates a flywheel of easier customer acquisition, meaning a lower CAC and, ultimately, better profitability.
Creating a Smart Property Program for Small Businesses
Now is the time to build a smart property program for business customers. Merging IoT and business with smart property programs that utilize data from devices in a smart way is a win-win for SMBs and insurers, and it represents a revolutionary new way of thinking.
Learn how to create the right smart property program for your business and partner with Notion.