The LexisNexis Risk Solutions Smart Home and IoT Consumer Research Report Finds That Adoption Rates are Strong and Significant Potential Exists to Educate, Grow the Insurance Market
A new LexisNexis® Risk Solutions study on the Internet of Things (IoT) released found that the vast majority of smart home device owners (78%) are willing to share data from devices with their insurance companies to assist in policy pricing, but most (65%) would only do so if offered a discount or incentive. The study unveiled that discounts might offer the push needed to persuade existing smart home device users to share data, but they are less effective for those consumers who are not currently using or considering a purchase of smart home devices.
LexisNexis Risk Solutions conducted the study to evaluate consumer attitudes around participating in smart home programs through their insurer and to help insurance carriers identify the business implications of the growing number of smart devices used in homes today. While the rate of smart home device adoption is increasing, the creation of smart home insurance programs has yet to meet policyholder desire to use these devices and their data for discounts.
Consumers have demonstrated a willingness to purchase home automation devices for the right insurance incentive, and have an interest in hearing from their insurer through smart home platforms:
- 57% of device owners are likely to purchase and install another device for an insurance discount, and 70% said they would be willing to engage with their insurer for offers of savings and coverage enhancements.
- 47% of respondents would be willing to receive new offers of insurance.
- 59% said they would be interested in getting energy management tips from their insurer through these platforms.
Coming out of the study, the top consumer motivators for owning smart home devices include increased safety/security (47%), the convenience of managing devices remotely (31%) and reducing energy bills/saving money (25%). Top barriers to owning include perceived cost of the device (58%), lack of perceived need (42%) and privacy concerns (26%).
While consumers continue to adopt IoT devices at an accelerating pace, awareness of smart home insurance programs is limited. Insurance carriers have a unique opportunity to further increase adoption rates among consumers by highlighting the core benefits of owning common smart home devices.
“It’s clear that consumers are ready and willing to bring insurance into their home automation experience for the right incentive and interactions,” said Dan Davis, Director, IoT at LexisNexis Risk Solutions. “This insight creates an opportunity for home insurance carriers to continue the investments they are making in this space to further boost adoption, provide additional benefits to policyholders and drive engagement, loyalty and possibly better pricing.”
Recommendations for Home Insurance Carriers
Carriers can build smart home programs that tie to the specific types of devices consumers are already using. The study showed that smart home device owners (81%) say receiving a discount for information/alerts would be a valuable component of an insurance company’s ‘smart home’ system/device program. Other valuable aspects include:
- Alerting consumers when sensors detect water leaks (76%)
- The insurance company contacting authorities if a person is detected outside or inside their home (75%)
- Alerts from the insurance company if security sensors detect someone at/in their home (74%)
- Insurance company remotely turns water off if leak detected in home (71%)
- Insurance company automatically receiving incident-related information to expedite claims processing (73%)
Increasing marketing efforts around existing programs, including cost savings and extended coverage in the form of alerts and early detection can also help drive awareness and participation – particularly among those consumers who already own a smart home device. To get started, carriers can talk to customers to gain insights, offer meaningful incentives like insurance discounts and event intervention alerts, and develop better understanding of the value of specific smart home devices and data sharing for their target customers.
“A great starting point for insurers is to identify smart device owners at the time of quote and begin building a complete view of the homes they are insuring. This will drive business intelligence for carriers who want to understand the potential impact of a smart home program on their book of business, and eventually enable more tailored product offerings,” said Davis.
For complete findings, download the LexisNexis Risk Solutions Smart Home and Internet of Things Consumer Research Report whitepaper.