The results from the study suggest that the home insurance market has an opportunity to play a more active role in engaging customers in connected technologies. While 81% of home insurers anticipate that the insurance industry will impact adoption and use of smart technology, they need to overcome the barriers cited by consumers in the research which included the perceived cost, lack of perceived value and lack of information and understanding about how connected home technology works.
The study also revealed insurer behaviour is out of kilter with consumer expectation when it comes to the home insurance application process. 87% of homeowners in the study believe reducing the number of questions asked during the home insurance application process would make the process easier. This highlights a significant opportunity for insurers to optimise the customer experience by delivering a more straightforward and digitised journey using data prefill solutions. Not surprisingly, 85% of home insurers in the study said they believe data analytics will be transformational in the next year or two.
Jay Borkakoti, Director of Home Insurance, UK and Ireland, at LexisNexis Risk Solutions said: “We believe smart home technology data holds huge potential for home insurers. Think of connected home technology as similar to a telematics device installed in a car with the insurer receiving alerts on emerging faults and behavior based information – providing the insurer with factual information on known factors which drive risk. This type of data will be hugely valuable to home insurers in better understanding and mitigating risk.
“Our research suggests that insurers could be as influential as friends and family in encouraging homeowners to consider adopting smart home technology. This connected technology has the potential to shift the function of insurers from paying out claims to averting the claim arising in the first place. The potential is particularly exciting when you consider the drain on the industry through escape of water claims - £667m in 2016[1].”
The study also identified managing profitability as the key focus area for UK home insurers with 81% confirming this. Better managing the risk profile of their book, managing increased price competition, improving the end-to-end claims process and enhancing the customer experience rounded out the top five priorities for home insurers.
Jay Borkakoti continues: “Combining data from smart home technology with advanced analytics will help home insurers achieve better risk profiling resulting in more accurate pricing – all of which support the home insurer’s profitability goals. With consumers embracing digitisation as well as social and mobile technologies, home insurers have a very clear window of opportunity to evolve and innovate digitally in order to compete effectively in a market challenged by soft rates, economic uncertainty and the constant threat of extreme weather events.”
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