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Smart Home Technology is Changing Insurance Industry
Changing Insurance Environment
Smart Home Technology is Changing Insurance Industry
  • By Cho Jin-young
  • May 31, 2017, 04:00
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An increasing number of insurance companies are reviewing their business models by using the IoT and smart home technology.
An increasing number of insurance companies are reviewing their business models by using the IoT and smart home technology.

 

The Institute for Information & communications Technology Promotion (IITP) of South Korea said on May 30 that no insurer is likely to allow homeowners insurance for non-smart homes in 10 to 15 years from now.

According to the institute, this is because insurers are expected to focus on insurance policies based on the Internet of Things (IoT) as the IoT can make a significant contribution to their data collection and services. The institute also mentioned that only houses in which IoT sensors detect the freezing and bursting of water pipes and water leaks and inform the owners of the facts while stopping the supply of water, smoke detectors in bathrooms cut power supply upon detecting smoke from hair dryers and so on will have their value recognized by insurers in the future.

These days, an increasing number of insurance companies are concentrating on IoT marketing in the form of insurance premium discounts for houses and their owners opting for smart home sensors and the like. For example, U.S. insurance company Allstate and Canadian security service provider Rogers formed a partnership with each other and every Allstate customer installing the smart home monitoring system of Rogers can have a premium discount of up to 25% in the year of installation. According to Morgan Stanley and Boston Consulting Group, such devices are expected to reduce potential economic losses by 40% to 60%, resulting in a decline in insurance cost of US$32 billion to US$47 billion around the world for 10 years down the road.

Moreover, some of the insurance companies are reviewing their business models by using the IoT and smart home technology. This has led to the marketing of monthly smart home services beyond IoT-based insurance policies. For instance, Allianz is currently selling comprehensive security packages using Panasonic smart home solutions and AXA is providing housebreaking and fire prevention by means of its Mon AXA app.