Parks Associates’ study, “Insurance Opportunities in the Smart Home,” reveals that one-third of US internet households with homeowner’s/renter’s insurance would consider changing providers to obtain smart home devices. This research, involving 8,000 US internet households, explores consumer preferences for IoT devices that could influence insurance premiums or claims, assessing the potential for IoT expansion through the insurance channel.
With insurance costs escalating across the nation, both homeowners and insurers are seeking ways to lower premiums, claims, and payouts. Smart home devices offer a solution by detecting and preventing expensive damages, especially those related to water and electrical faults. Water-related damage is the most frequent form of home damage, reported by 26% of US households. The Insurance Information Institute estimates the average cost for water damage/leaks at $9,633, while flood/weather-related damage averages $8,625.
“Insurance is a highly competitive sector, with many companies offering similar products,” stated Jennifer Kent, VP of Research at Parks Associates. “Customers often have multiple choices, making it easier for them to switch to a new insurer. Smart home devices present an opportunity to attract customers from their current insurance providers and those new to the home insurance market.”
Collaborations between insurance and smart home companies illustrate the synergy of both industries’ objectives and business models. For instance, a forthcoming partnership between Nationwide and Resideo in early 2024 will offer homeowners insurance discounts for purchasing specific device packages. This partnership aims to expand the use of smart home technology in proactive scenarios, where devices can identify and report potential risks before they lead to significant damage.
“These partnerships allow insurers to mitigate risks, improve customer engagement, distinguish their offerings in the marketplace, and explore the burgeoning smart home technology sector,” Kent noted. “It’s a mutually beneficial strategy that serves both the insurance industry and homeowners looking for advanced protection and peace of mind.”
Parks Associates will present this research and more at its 28th annual CONNECTIONS: The Premier Connected Home Conference, scheduled for 7-9 May 2024, at the Hilton Dallas/Plano Granite Park in Plano, Texas. Sponsors of CONNECTIONS include Cox Communities, Nice, Ivani, Kaadas Smart Locks, Kwikset, Rapid Response Monitoring, SkyBell, Ubiety, Alarm.com, Cardinal Peak, Shelly, SmartThings, Becklar, Calix, bluesalve partners, RSPNDR, Trident IoT, Origin, and Z-Wave.
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