Only hours after leaving for vacation, a homeowner saw an unexpected message flash across her smartphone: "Interior temperature high, smoke detected…contacting fire department." It made for a brief vacation, but the notification may have saved a house. In this hypothetical scenario, sensors installed in a connected home recorded an oven's malfunction and a rapid change in temperature before transmitting the information to authorities who could help.

In the real world, connected residences stream reports about security, temperature, air quality, moisture, noise and other conditions, opening a new window for insurers into a trove of data. In North America, where an estimated 6% of homes have been connected, the trend toward joining the "Internet of Things" is expected to grow to a market penetration of 28% by 2019, according to the market research firm Berg Insight. Widespread adoption of smartphones and tablets is making the idea of remote monitoring of home conditions an easy and appealing prospect for consumers anticipating a better, and perhaps safer, quality of life.

Among insurers, opportunities for insights from connected devices will likely be enormous, even though using those devices introduces several challenges. Millions of devices sending continuous streams of information may soon lead to unscalable mountains of data. Questions remain about how best to structure that data and how to calibrate information provided by different technology providers. Policyholders also raised issues of privacy and the illicit sharing of information, and insurers surely will be tasked to show that home devices are secure and accurate in their transmissions.