Home automation services: the changing face of home insurance

Connected devices can be used in numerous ways:  for detecting floods, break-ins and fires, or for remotely activating or deactivating alarms, etc. They also make it possible to call out the fire brigade, the police or a security guard.

Far from being a fad, these attractive solutions provide real services and are increasingly becoming part of our daily lives. Some of these innovations are of direct interest to insurers, since fire detection and burglary protection are significant risk management assets.

Smart insurers

These home security services aim not only to make life easier for the occupants and ensure their well-being, but also to reduce the financial burden of their home insurance policy.

As part of the Protection Scheme within the Crédit Agricole group, we are working to strengthen operational cooperation between our entities. Complementary cover solutions, improved subscription tools, smoother customer journeys and preferential pricing schemes are some of the actions being implemented. For nearly a year, for example, Pacifica has been incorporating Nexecur into its range of solutions to enhance its comprehensive security strategy throughout all its markets: retail, professional and agricultural. 

Many insurers have followed suit, given the pricing and customer relations opportunities, and the chance to develop a competitive edge.

Key data collection issues

The data collected by IoT devices will eventually improve the analysis and prediction of loss ratios, and with it the ability to offer personalised pricing schemes. It should also give insurers the means to enhance the quality and relevance of their services which will enable them to offer more competitive solutions.

Everything will depend on the data collected and its analysis. Incidentally, this raises the issue of whether customers agree to their personal data being collected, retained and used, especially in the context of the General Data Protection Regulation (GDPR).

The Boston Consulting Group recently estimated that American insurers could eventually reduce the amount paid out for claims by 40 to 60% thanks to real-time data from smart objects. Yet in France, one in every three people still believes that the cost of such services is too high, while some people also confide that they have reservations about the protection of their privacy.

From service providers to partners

No longer simply service providers, insurers are increasingly becoming partners. Gone is the time when their sole function was to cover a loss after it had occurred. Now, their involvement begins earlier. Their role is more extensive, forming part of a global approach to protecting their policyholders. 

The connected home ecosystem enables insurers to offer increasingly comprehensive solutions, from risk management through to proposing value-added services to customers by emphasising the concepts of prevention, assistance and global customer protection.

Today, insurers see themselves as genuine suppliers of connected solutions for the home, and they are forming partnerships with manufacturers. In France, insurers are even preferred as consumer motivators to other operators such as tech companies* including GAFA**.

*"Le marché de la maison connectée en France," a study by Xerfi/Precepta, July 2017
**The big four Internet companies: Google, Apple, Facebook and Amazon