Smart Homes and the Uberisation of Insurance

Not long ago, Uber was just a taxi app. Today you can use it to order a takeaway, transfer money and hire bikes and scooters. And you can pay using your Uber Visa card.

The company’s digital ecosystem is growing, integrating new services that go way beyond its founding business model. By leveraging its knowledge of its customers, it’s aiming to make
itself indispensable to them.

Taking the same approach, China’s biggest insurer Ping An has added healthcare with digital diagnosis to its app-based service. Insure your car with Ping An and its app will warn you about accident hotspots as you drive.

In fact, this trend can be seen across a whole range of different industries, connecting different business models and services in brand new ways.

Smart Homes

One of the most exciting places where smart technology and services are coming together is in the home.

Devices like Centrica’s Hive range of smart products allow customers to control heating, lighting and appliances remotely. Active heating thermostats enable customers to save energy by only heating the rooms they’re using.

These technologies can be linked to services such as boiler repair when the heating stops working.

Meanwhile motion sensors and cameras connected to smartphones can help customers keep their homes secure.

Reduced Premiums

Such technologies also have the potential to make our homes cheaper to insure too. Flow sensors that detect a leaking pipe, for example, or devices that can shut off appliances accidentally left on, could all reduce the risk of an insurance claim.

By integrating these devices with an insurance offer, it will soon be possible to produce personalised policies based on risk profiles for individual homes.

And Fin Goulding, co-founder of Flow Academy and former CIO of insurer Aviva, is aware of just how quickly things are changing.

“Smart home technology is changing insurance quite rapidly at the moment. It’s moving more towards prevention. So, you get to know quickly what’s happening in your home and take action rapidly,” he says.

Lower risk levels will translate into lower premiums. But there are also other benefits.

“Centrica has a significant amount of data about our customers’ homes and is uniquely placed with a range of services that can not only detect problems before they can become big issues but can also provide insurance if things do go wrong,” explains James Barwell, Head of Home Insurance at Centrica brand British Gas.

Seeing The Benefits

There is no doubt smart home ecosystems will give us greater control over our lives, save us money and provide peace of mind.

But with nearly all disruptive technologies, there are some obstacles and preconceptions to overcome.

For example, the smart devices in our homes will need to share data with insurance companies about the way we live, raising issues around privacy.

So, people will need to be reassured that their data is secure and never shared inappropriately.

Price is another challenge, although some providers have considered offering devices free of charge. The fear is that what comes free may not be valued.

Then there is the issue of compatibility. Insurers will also have to overcome the resistance of makers of alarms, thermostats and even digital locks to open up their software to allow them to be used for the purpose of insurance risk assessment.

Centrica’s own research suggests that attitudes are shifting.

Source: Centrica Hive

Source: Centrica Hive

A survey of more than 1,000 households by Centrica’s smart home business Hive found that 85% could see the benefits of being able to control their home heating with a smartphone app.

And almost half liked the idea of their fridge being able to update their shopping list. But there was some unease – the so-called creepiness factor – when it comes to smart homes predicting what you want without you asking.

As people use more and more devices within the smart home, such unease will start to diminish, paving the way for additional products such as personalised insurance.

“Insurance has been a once a year consideration unless you are unlucky enough to have a claim,” Barwell says.

Now, the goal is to deliver a solution to a customer’s problem by adding value, reducing the cost of cover and changing how home protection solutions are viewed altogether.

And that may turn out to be as revolutionary as Uber.