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20Sep

Automated Home Insurance

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Automated home insurance is still in its infancy, however with the number of connected devices available in the market it is inevitable that the insurance industry will seek to utilise IoT technology to enhance their product offerings.

The main causes of home insurance claims in the UK are fire, theft and escape of water, with the latter accounting for a quarter of the cost of all claims .  It’s evident that devices designed to mitigate these risks would be hugely beneficial to both policyholders and insurers.  

This is where marketing comes in…

Consumers want fridges that tell them when they’re running low on milk, and doorbells that tell delivery drivers where to leave packages; they don’t want leak detection systems.

Only 7% of UK Household Insurance policyholders have a leak detection system in place compared with 25% having digitally controlled lighting systems.  It is promising however, that 39% of us already have online smoke and carbon monoxide detectors and that 20% are looking to invest in online security cameras, as these are key in reducing the cost of household claims.

The three basic devices required for Automated Home Insurance are;
1.    Smart Smoke Alarm & carbon Monoxide Detector
2.    Water Leak Detection Device
3.    Online Wireless Connected Security Camera

Given that the adoption of these connected devices has yet to reach its peak, there is plenty insurers can do to influence consumers purchasing decisions.  Adding the devices into the cost of the premium would be prohibitive, so convincing consumers of the benefits of purchasing these devices themselves seems sensible; peace of mind and potential financial savings being the primary drivers.

Of course, it’s not all roses

Increased connectivity means increased risk in other ways.  The success of an Automated Home Insurance policy relies on the household devices being connected to the internet, but this brings its own set of cyber security risks.  It will likely be necessary to add a level of personal cyber cover into these home insurance policies to protect the policyholder from hackers, but a lack of historical claims data in the cyber market is exactly the issue underwriters face when designing products.

The issue for many consumers, as with most insurance products, is of perceived value; if they purchase these devices, they may not see any benefit from them for years, or the devices may do their job and remove the risk entirely meaning the policyholder never has to make a claim.  

 

A history of automated insurance

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