Over the past two years, small and medium-sized businesses (SMBs) have faced unprecedented challenges and changes such as reduced workforce, supply chain interruptions due to COVID-19, and reduced or shifting revenue. In weathering these upheavals, SMBs have reevaluated how they do things from the top down to serve customers in innovative ways, grow in a time when growth seems unlikely, and keep employees engaged and productive.

One way SMBs are doing is this is by leveraging smart property devices and the Internet of Things (IoT). IoT and business insurance innovations allow SMBs and their insurance carrier to improve profitability and streamline operations in ways not previously possible.

Smart property solutions and connected commercial insurance programs represent a win-win for businesses and insurers. They enhance customer long-term value (LTV), lower customer acquisition cost (CAC) for insurers, and give businesses better peace of mind.

The Changing Landscape of Commercial Property Insurance

Business owners and insurers alike recognize the value of business insurance innovation using smart devices and the Internet of Things (IoT). In fact, the IoT insurance market is expected to grow by 40% over the next five years. This is due in no small part to the number of potential benefits associated with smart property programs.

For instance, buildings equipped with water leak detection sensors can help head off costly damage and mitigate money bleed associated with extra water use. Smart entry systems can help enable better business monitoring by detecting when doors and safes open. And smart lighting systems can curb extra energy use and cost.

The Biggest Risks to SMBs

To best protect customers, commercial lines must leverage technology to meet the risk factors that SMBs deal with. Chief among these for many businesses are fire and water damage. According to data from FEMA, fires caused an average annual loss of $16.05 billion last decade, with big spikes in 2017 and 2018. Plus, 52% of commercial fires between 2014 and 2016 happened in buildings with no working smoke detectors.

Water damage, meanwhile, is occurring with increasing frequency due to aging buildings and inconsistent infrastructure, which also leads to increased severity. The cost of water damage repairs trends upward and deductibles continue to increase, meaning business property insurance rates also continue to rise. A survey by Verisk Analytics found that insurers paid out $13 billion in water damage claims in 2017 alone.

Damage like this can come from sprinklers, leaky roofs, overflowing toilets or faulty plumbing. Not only can leaks like this cause major repair expenses, but they can also be costly to business owners in the form of wasted water. A leaky faucet losing one drop per second can waste 170 gallons of water per month and additional money in expenses.

With so many risks of doing business, carriers are smart to find all possible ways to help businesses manage property risks, which are some of the easiest to confront with the right technology.

Real Benefits for Insurance Carriers and SMBs

The growing use of smart property systems will continue to change how insurers assess risk and interact with businesses. And they translate to tangible benefits for everyone.

Upgrading commercial properties with connected devices can help reduce premiums by reducing risk and severity of claims. Meanwhile, carriers can take advantage of this wealth of new data to set rates, streamline claims and create unprecedented relationships with customers.

These devices further give insurers the chance to interact positively with businesses — warning them of impending damage from a leak and recommending a contractor, for example. These extra touchpoints build solid relationships with business owners, changing the reputation of insurers for the better. This level of service differentiates carriers from the competition and keeps customers engaged and loyal. This all adds up to better customer loyalty, higher customer LTV and lower CAC.

Businesses benefit, as well, with lower premiums and peace of mind. This kind of win-win situation is ideal for both insurers and SMBs. And this isn’t just a future to fantasize about. On the whole, these systems and devices are already revolutionizing business property insurance.

Better Property Monitoring Is A Win-Win for SMBs and Carriers Alike

Business insurance innovation is changing the face of commercial property insurance. From water leak and fire detection to environmental data and efficient energy use, smart property systems provide a whole new level of service for SMBs.

It’s clear that smart devices are not going away, and neither is the long-lasting marriage of IoT and Commercial P&C insurance. Carriers catering to SMBs can gain a competitive advantage by offering modern solutions, such as Notion’s, through partnerships that support acquisition, retention, and long-term customer engagement.

Want to learn more about how to create an integrated smart property program? Get started by talking to Notion.