Smart homes are getting smarter. Equipped with voice control, they can follow spoken directions. With connected fridges, they can make suggestions about dinner. With smart utilities, they can optimize both comfort and efficiency. Soon, they may recognize their homeowners by their heartbeat.
What does all of this mean for personal lines insurers? "Technologies like IoT and insurance telematics provide huge opportunity for the insurers to improve their products and the way they interact with their customers, and many insurance companies have already started to experiment," said Johan den Haan at IoT Agenda. "However, a huge shift in mindset is needed to be able to reap the benefits of these new technologies."
A huge shift in mindset is needed
The obvious benefit of the connected home is in its reactive systems: a smoke detector senses smoke, then raises an alarm. Crisis averted. But to stop there would be to stop short. Insurers can capitalize on IoT data to detect problems before they turn into damages, taking a predictive approach to prevent losses. If you realize there's a leak, you can stop it before it turns into a loss.
"As sensors and connected devices proliferate inside the ... home, they will generate a huge amount of data, leading to better decision making across the industry," Haan said.
There is a flip side. Last spring, PwC said that almost half of insurers worry about losing up to 20 percent of their business to standalone FinTech (financial technology) companies over the next five years. According to Business Insider, these startups, also known as insurtechs, are collecting data from a wider pool of sources, using sophisticated analytics to understand it, customizing flexible pricing plans based on granular data, and reducing the need for agents through automated advice.
Once again, we're looking at the two-sided coin of potential and disruption. How can insurers maximize one, and mitigate the other?
Three ways insurers are capitalizing on connected homes
Go deep in IoT. Insurers can use connectivity to build a closer relationship with customers, get insights into their behavior, and make better decisions about underwriting and pricing, said the Financial Times.
Integrate yourself as a service. About a month ago, Grange Insurance launched its own "insurance skill" on the Alexa Voice Service, which means users can ask Alexa their insurance questions now too.
Partner with tech. Jessica Ekholm at Gartner said a growing number of insurers are partnering with connected home providers. The data they gain through such a partnership is predictive gold.
Recently, McKinsey published an infographic on the state of connected homes in 2017. "The vision of the connected home is finally beginning to come together," it said. It's time for a coordinated response from insurers to come together, too.
The FedNat Insured Web is a great tool for our insureds!
They like having a centralized location to view policy info, make payments, upload policy documents, and elect to become paperless to receive a discount.
The insureds also can file a First Notice of Loss for a claim and access exiting claim info. Silvervine recently enhanced the site which allows insureds to upload policy documents directly to their policy. The uploaded docs go directly into our workflows and save a lot of manual effort on our part.
From my visits with agents, the agents appreciate the app for the amount of time saved on having to download and attach photos directly to the policy.
The app can also reduce the amount of staff required for a busy office to fulfill underwriting requests for photos.
When training agents they are amazed at how quickly the photos attach directly to the policy. After taking photos using the app and before they make it back to their desk, the photo is already attached to the policy. They also like the ability to attach additional photos for pre-existing damage.
Customer Service is seeing an improvement with retention as the text message definitely triggers phone calls from insureds to make payments.
The insureds love the fact that we notify them on their phones because they state that sometimes they don’t receive their mail for various reasons.
The insureds are paying more attention to the texts then to their actual mail. We try to set all of our customers up on that option if we notice that they are not currently enrolled, as it builds great customer relations as well as retention.
As a company we have adopted the use of Policy Scan for all our policies, and our agents have adopted the use of the app as well.
Not only is it easy to use, there is also no more worrying about losing photos, having to store photos or photos being attached to the wrong policy.
With Policy Scan we have increased efficiency in our workflow and reduced our exposure on the risk.
Silvervine’s core administration solutions easily handles multiple carriers within multiple states, including accounting, payment processing, immediate policy issuance and endorsements.
What started out writing one product, one line in one state has now grown into mulitple products, multiple lines and writing in multiple states. We have over $95 million in annualized premium in-force and we expect to grow by 20% during the next year all serviced by Silvervine.
Silvervine was our insurance software system of choice when we started the company in 2006. Silvervine enabled us to begin business within a few months of licensing the company. Today, we are one of the top 20 homeowner’s writers in Texas and SIlvervine’s solutions have been an integral part of our success.