The Biggest Opportunity for New Insurance Products and Models
Identifying IoT Market Opportunities: Property & Casualty Insurers
What is the Market Opportunity for the Connected Home and How can Auto Insurers Take Advantage?
For years, insurance companies have been successfully using telematics to track the driving habits of their policyholders, enabling them to assess risk based on actual driving behavior. In exchange, policyholders have been rewarded with discounts based on good driving behavior, but as this novelty wears off, insurers are asking more from their insurance providers, allowing for an opportunity for insurers to evolve and take the next step into the connected home. By 2025, the global connected home market is expected to reach over $170 billion.
Today there is an opportunity for new insurance products and models, based on customers’ needs for a connected life. By thinking about how customers currently engage with the Internet of Things, insurers can enter the connected home market and enhance customer experience. It is estimated that by 2020, there will be 30-50 billion connected entities (people, items or smart devices) on earth. With this in mind, they can start offering discounts for security systems, fire protection systems, and water–leak detection systems. These products become beneficial as ways to reduce or eliminate the risk for an insurer and provide real value to the customer, driving the relationship with insurance.
We can see that the connected car and the connected home are not mutually exclusive, and control for the home on your dashboard is the next logical step for the connected life. With DriveSync connected to the home, there is the possibility of telling a car, once its 1 km from the home, to turn the lights on, turn the alarm off, and even to open the garage door or turn up the thermostat. This provides the value-added services that customers are looking for from their insurance companies.
As the cost of connectivity continues to fall and the benefits become increasingly apparent to homeowners, the connected home market is likely to continue to grow rapidly over the next five years. Forward-thinking insurers can get on board and keep relevant in this rapidly changing space by seeking out partnerships with the right technology providers and exploring the right value propositions for their customers.