To better understand the future of Smart Homes, GfK conducted a study to explore consumer knowledge and expectations, key areas of opportunity, the main adoption barriers as well as how they can best be delivered.
Here we provide you with a summary of their research and how this relates to the insurance market.
Consumer knowledge & expectations
GfK conducted primary research with consumers in countries where Smart Homes is increasingly relevant or presents an opportunity for significant growth in the near future (consumers were interviewed in Brazil, Germany, Japan, UK, US, China & South Korea).
Around half of consumers expected Smart Homes to have an impact on their lives in the near future, a feeling most pronounced relative to other technologies in the UK, Germany and US. Leading-edge consumers identified Smart Homes as the trend most likely to impact their life over the next few years.
While Smart Homes is an emerging trend for many consumers at a conceptual level, it is clear that many are already adopting Smart Home products and services. Over half of leading-edge consumers have already bought at least one Smart Home product and are more likely to own more than one.
Opportunity & barriers
Security products and services have been one of the first areas to gain market traction. Surveillance and alarm systems offer the greatest immediate opportunity, although interest is clear across a range of security products and services.
When asked directly, consumers see cost to purchase, privacy concerns and lack of knowledge as the main factors preventing purchase.
The potential in insurance
According to Verdict Financial, home insurers can do more to harness the potential of Smart Home devices, to help reduce the cost and frequency of claims.
Escape of water claims are the biggest threat to the profitability of the home insurance market, with the Association of British Insurers (ABI) estimating the average cost from a burst pipe being £6,500 - £7,500.
Introducing smart technology to the homes of policyholders would allow more control over water systems that can minimise the potential risks posed and reduce losses. For example, installing water-leak detection devices can allow for improved responsiveness to contain the risk and level of damage caused to the customer’s home, thereby lowering the level of claim.
Although the use of Smart Home technology is still in its infancy, it is important that insurers start embracing its potential to reduce claims and communicate these benefits to consumers.
RSA point of view
RSA is currently evaluating several opportunities within the Connected Home space to inform our overall personal lines strategy. Although Smart Home technology is new and unproven for insurers we are keen to adopt a test and learn approach and are having conversations with start-ups, tech companies and our external partners. Our partnerships will be critical to our success here and we want to ensure any solution provides value for us, our partners and most importantly our customers.