The past few years have shown an uneven (yet inevitable) transition to a more internet-connected lifestyle.
Consumers buy more smart devices each year — from kitchen appliances, lighting and sprinkler systems to smart cars and wearable devices — and manufacturers keep creating new ones. While some may not have noticed it, connected sensors already stitch together whole swathes of our economy.
As is often the case with transformative change, these advances also involve risk. Understanding that risk is important to maintaining and building customer relationships in the future.
|Promise and risk
To examine attitudes across an increasingly connected landscape, Assurant recently conducted a comprehensive survey of U.S. consumers. Overall, the study, titled "Connected Future: Navigating Promise and Risk," found that connected technology's leading benefits (cited as savings, enjoyment and peace of mind) are also accompanied by anxiety and uncertainty.
To better understand these concerns and what they mean to insurers, it's helpful to start by distinguishing between the types of consumers who purchase connected devices, as not all consumers have adopted the connected lifestyle at the same rate or for the same reason. We identified five categories of consumers, listed from most to least connected:
- Technophiles (5 percent) embrace all kinds of consumer tech innovation.
- Home protectors (12 percent) find peace of mind with connected control.
- Convenience seekers (21 percent) have a utilitarian interest in chore reduction.
- The entertained (24 percent) selectively choose a few engrossing products.
- The unconnected (39 percent) use a minimum of tech products, and do so reluctantly.
However, as noted, determining these categories is just the first step toward better understanding connected consumers.
There's a palpable fear of the risks of being connected. The good news for insurers is that value-added services can help overcome this reticence. (Photo: Shutterstock)
|Complex groups
Digging deeper into the data reveals that each group is more complex than what initially meets the eye. For example, "the entertained" are more likely to be women, despite many entertainment devices (e.g. video game consoles) tending to be skewed toward a male audience.
It is also surprising to discover that the wealthiest consumers, the most connected and those focused on entertainment, all fall into separate categories. "Home protectors" are the most affluent, but on average own less than half the number of connected products as the "technophiles" (7.6 compared to 15.5). Additionally, "the entertained" own the second lowest number of connected products, contrary to the general association of connectivity and leisure/entertainment.
The study also revealed that age has a significant impact on which benefits of connected living are valued most. Respondents aged 65 and older benefit most from the savings and peace of mind they get from connected technology. Younger adults tend to value convenience and teens are more likely to relish technology purely for enjoyment.
|Fear of risks
What's clear across all segments is that there is a palpable fear of the risks of being connected. More than half of respondents were either "terrified" or "very concerned" about identity theft (65 percent) and cyber-attacks (62 percent) when they heard news stories about hacks and breaches. Nearly half (46 percent) went so far as to indicate that they would be less likely to purchase connected products and devices.
The good news for insurers is that value-added services can help overcome this reticence. Rather than abandon their devices, nearly eight out of 10 respondents said that they would simply buy additional products that increase protection against such risks.
Across a broad range of 26 internet-connected products, approximately 45 percent of respondents are more likely to buy those that offer a two-year extended warranty or an insurance policy covering theft, loss or damage. "Technophiles" in particular are much more likely to protect themselves and their purchases with additional coverage. In turn, they experience half the level of fear and frustration associated with a connected lifestyle.
This is evidence that, despite fears or concerns, consumers want to remain connected. As insurers, it's our job to help them stay protected.
Keith Demmings is president of global lifestyle for Assurant, and a member of the company's management committee. He is responsible for setting strategy, driving financial performance and leading Assurant's connected living lines of business, including its mobile phone and extended protection plan products and related services, as well as vehicle protection, credit protection and assistance services. Demmings can be reached via Andy Mus at [email protected].
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