Internet of Things and smart home technology offer significant growth potential for property/casualty insurers, but data access limits could restrict how big the boom becomes, according to a new report.

Eighty-three percent of U.S. homeowners insurance carriers said they see Internet of Things and smart home technology as attracting new property/casualty customers, global business and IT services provider NTT DATA determined. At the same time, 68 percent said that the inability for them to gain access to smart home device data would be a barrier toward finalizing carrier programs in this area around the country.

The report’s conclusions are based on an October 2016 survey of more than 100 carrier executives involved in strategy and execution, budgeting and decision making, as well as 1,000 U.S. homeowners online.

Normand Lepine, NTT DATA’s senior practice lead for insurance data and analytics, noted both the technology’s potential for insurers and the challenges that remain.

“While enthusiasm for and investment in the smart home ecosystem is high among carriers, major challenges still exist in its evolution,” Lepine said in prepared remarks. “If carriers are to realize the anticipated benefits of smart home technology, they must first lock down the necessary business capabilities for adoption, including data analytics and data security, and find partners with proven [Internet of Things] capabilities to help them prepare to deliver innovative services and products to their homeowner policy holders.”

Among the findings:

  • 52 percent of seekers, customers who would shop around for a new insurer, are interested in understanding potential savings from smart home programs.
  • 50 percent of customer survey respondents said they expect to purchase a smart home device in the future, with the percentage leaning heavily to millennial customers.
  • The top five smart home devices would involve thermostats, smoke/CO alarms, garage door openers, door locks and door bells.
  • 55 percent of carriers versus 16 percent of carriers are eager to sign up for smart home programs and policies.
  • 77 percent of carriers versus 37 percent of customers believe that customers feel protected by their homeowners policies.
  • 62 percent of carriers said the issue of building analytics into the carrier underwriting process is a big obstacle toward finalizing smart home programs. Another 55 percent see the cost to purchase and install smart home devices as a major carrier challenges.
  • 87 percent of carriers see the Internet of Things as improving customer relationships. About 83 percent see the IoT as a way to attract new customers. Approximately 74 percent see the IOT as a big influence on future products and services.
  • 2 in 3 consumers would switch insurers in order to get a smart home device homeowners policy discount.

The full report is called “IoT Disruption and Opportunity in the U.S. Insurance Industry.”

Source: NTT DATA