Finansliv, Sweden: Cognizant’s Country Manager for Denmark Says Smart Homes Offer a Goldmine of Opportunity for Insurers to Reduce Losses and Enrich Customer Experience

“So-called black boxes are already collecting data from the cars we drive. The trend is now spreading to our homes,” says Thomas Djursoe. “Coupled with advances in data analytics, people’s smart homes present compelling opportunities for insurers to reduce and mitigate losses, improve underwriting, enhance the personalization of products and services, and enrich customers’ digital experience.” Excerpts:

“We are now seeing a rapid increase in smart home adoption, with the worldwide smart home market projected to more than double, to $71 billion by 2018 from approximately $33 billion in 2013.

As smart home technology moves into everyday life, it presents a number of opportunities for Swedish insurance companies. Data from smart home devices and sensors have the potential to change the way insurers sell and service home owners’ insurance products. Moreover, the selling proposition will increasingly shift to how losses can be prevented, or mitigated at the very least.

This includes risk analysis based on real-time information delivered by devices in the home, as opposed to today’s proxy risk indicators (for example, credit scores, year of construction, age of roof, post code).

Smart home data can provide important insights into the cause of loss, which, in turn, will aid insurance claims investigations.

The ability to monitor virtually every aspect of an insured’s home remotely—and in real-time—will make these properties a preferable risk for any insurer, creating differentiated products and added value services such as personalized product, coverage and service offerings.

The proliferation of smart homes will undoubtedly be disruptive for insurers and their customers as change comes with its own set of unique challenges. Overcoming concerns around privacy, managing cyber-security issues, controlling adoption costs, addressing fears about premium increases, and tackling practical data-collection problems through common connectivity standards are some key obstacles that insurers will need to surmount.

In today’s highly commoditized insurance market, where competition for market share is intense, a smart home strategy can help insurers gain market share by offering preferred pricing commensurate with the risks of each customer, helping to improve customer retention and acquisition.”

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