The internet of things (IoT) has become a ubiquitous presence in our everyday lives. From the cars we drive to the places we live and the appliances and technologies we use, IoT helps consumers with added comfort and convenience.

It also helps insurance companies because the same technology can protect homes and vehicles from risk. These devices provide important data that lowers premiums and helps consumers achieve more savings and a reduction in total claims. Learn why DIY smart home programs and other advanced technologies can help carriers better understand their customers and be proactive in providing better service.

The Old Model: Before Insurtech

In the old insurance model, companies would use historical data to determine a person’s potential risk of loss and set rates accordingly. If the risk calculations showed that a vehicle or home is at a higher risk of damage or loss, the premiums went up accordingly. There wasn’t much a person could do to change that information, even if they were personally a careful driver or took extra precautions to make sure their home was safe.

However, today’s new insurance models make it easier for insurance companies to get real-time, personalized data about individuals rather than making broad assumptions based on demographic groups. Auto-telematics programs have already shown that this model can improve, and home programs are already starting to follow in the same direction.

Technology Presents New Opportunities for Carriers and Customers

While insurance carriers have been slower to adopt technology than some other industries, the use of insurtech is on the rise. The available technology presents significant opportunities for improving insurance products while potentially lowering costs.

Today there are more than 51 million smart homes in North America. That represents more than 35% of homes, a number projected to increase to 78 million (53% of homes) by 2024. This rapid growth opens a door for insurance carriers.

With an increased amount of data at their fingertips, today’s top insurance carriers are using information to better understand their customers and help them avoid high-risk events in the future. The days of only engaging with customers at acquisition, time of claim, and renewal are over. Using technology like Notion, carriers can send customers real-time alerts when issues arise, improve marketing engagement by sharing tips around proactive behaviors, and more.

The Future of Customer-Carrier Relationships

Connected homes have the potential to dramatically change the relationship between insurance carriers and customers. Technology makes it possible to monitor what customers are doing almost in real time to automatically adjust rates, products and services.

For example, in the past, auto-telematics data has helped insurance carriers separate high-risk and low-risk customers, offering incentives to those that adopt safer driving behaviors, drive less or drive at times of the day when accidents are less likely. All of this can reduce the chances that a driver will need to file a claim. Smart home technology is finally starting to catch up to telematics, but insurers are only now learning how to aggregate the data from these devices.

Technology also helps companies take a more proactive role in preventing future claims and improves insurance customer service. For example, a smart home self-monitoring device with sensors to detect leaks, identify temperature fluctuations or look for open windows and doors can alert homeowners to these anomalies and recommend maintenance or other actions to improve health and safety. That is a complete change from the previous model where carriers waited for something to go wrong to process a claim. It has the potential to prevent major damage, reduce risk and lower costs for customers and carriers.

Smart devices make IoT insurance a reality for companies and customers who want a better and more accurate way to assess risk and work with clients to lower costs in the future.

Create a Smart Home Strategy With IoT Insurance

Insurance carriers ready to embrace the benefits of connected devices and smart technologies should start by partnering with an insurtech leader like Notion. With the right partner, you can build a strong program that improves return on investment and helps you grow insurance sales with new customers over time.

Learn more about how Notion can help.