Study Finds Consumers Welcome Discounts for Using Smart Devices
Staff Writer | January 17, 2017
Two out of three U.S. homeowners’ insurance customers would be willing to change insurance companies to get policy discounts for using smart home devices, including smart thermostats, smoke/carbon monoxide detectors and garage door opener, according to research findings from NTT DATA.
“Our study found there is a large distinct group of homeowners insurance customers—64 percent of survey respondents—who are willing to invest in smart home technology. However, these ‘seekers’ are less loyal to their current carrier,” says Normand Lepine, senior practice lead, insurance data and analytics for NTT DATA. “Seekers are the most important customer segment for insurers to pay attention to as they pose both a sizable opportunity for growth and a potential risk for disruption.”
In October 2016, NTT DATA surveyed more than 1,000 U.S. consumers and over 100 U.S. insurers online to answer four key questions:
1.Are consumers ready for smart home technology?
2.Will consumers share data to reduce risk and save money?
3.Are insurance carriers ready for the Internet of Things?
4.What are the barriers, threats, and opportunities for the insurance industry?
Key Study Findings
Non-traditional players pose a threat to traditional insurance carriers – 53 percent of seekers would trust a non-traditional provider such as Google or Apple for insurance coverage.
Top three reasons why U.S. consumers buy smart home devices are the same reasons they buy homeowners insurance – safety, security and cost savings. However, 80 percent of U.S. consumers are concerned about information security and 73 percent are concerned about privacy when it comes to sharing data from these devices.
Discounted pricing alleviates consumers’ privacy and security concerns. Customers are comfortable sharing data from their smart home devices when insurance companies agree to reduce their policy premiums. Seekers are more willing to share data, but their comfort level depends on how personal the data is and from which device:
- 47 percent of seekers will share data from thermostats
- 41 percent from security systems
- 59 percent from CO detectors
- Only 24 percent will share data from cameras
Insurance carriers have made strong progress leveraging smart home technology to improve products. Carriers realize that the Internet of Things creates opportunities to extend services and value propositions to customers and change the way insurance is delivered. The study found 77 percent of carriers are ramping up IoT initiatives and 59 percent say they have made strong progress leveraging smart home technology to improve products.
Uncertainty creates an opportunity for disruption. The role insurers will play in the IoT ecosystem and how they will gain access to the data from customers’ smart home devices is yet to be determined. Competitor segments that insurers believe are best positioned to be major players in the evolving smart home ecosystem include:
- 72 percent - Major technology firms (i.e. Google, Apple and Samsung)
- 50 percent - Home appliance manufacturers
- 36 percent - Telecommunication firms
- 37 percent - Insurtech companies
- 25 percent - Insurers
- 19 percent - Utilities/cable
“The IoT ecosystem is disrupting the insurance industry, inviting new competitors, potential partners and changing how products and services can be delivered,” says Lepine. “Accessing the data that comes from smart home devices and being ready to leverage it will be key to carrier success. NTT DATA recommends insurance companies prioritize the development of partnerships with the smart home gateway firms who will control the flow of this data. Don’t get shut out.”
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- ProSight Direct Offers “Effortless Insurance for Today’s Professional”
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Unique partnership between VMSolution and FRISS enables fast claims process
- Roost Joins the IoT Insurance Observatory
- Appalachian Underwriters launches world-class billing and payments offering (through Input 1)
- National Life Transforms Customer Experience Program with Cognizant
- Insurers Driving Real, Measurable Value from Digital Investments
- Insurers Embracing Digital Claims Payments, Says Novarica
- Majesco and DataRobot Partner to Bring Integrated AI/Machine Learning with Majesco Solutions to Customers and the Insurance Industry
- Stonetrust Commercial Insurance Selects Insurity’s Cloud-hosted ‘Workers’ CompXPress Suite’ to Improve Operations and Customer Experience
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2019
The tide is up! It's time to register for ITA LIVE 2019, our annual educational and networking conference! Our theme is "The InsurTech Revolution: Cutting Through the Hype." and we'll be bringing in a torrent of industry thought leaders, amazing insight and wonderful perspectives on the world of insurtech and its impact on the insurance landscape.
ITA LIVE 2019 will present real-life examples of true startup technologies that are helping insurers gain real advantage -- and a competitive edge -- in the marketplace. We’ll highlight the more successful InsurTech partnerships, while offering case studies that demonstrate exciting innovation and cutting-edge techniques impacting all aspects of the insurance ecosystem.
Ride the wave to LIVE 2019. Sign up today! We look forward to seeing you in May, 2019!
BLOGS AND COLUMNS
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE