Smart home devices may lure insureds to new insurers
More than 30% of homeowners with internet say they would switch insurers to get smart home devices for safety and security.
Insurance costs are rising nationwide, and homeowners and insurers are both looking for ways to reduce costs and prevent property damage. Smart home devices may do the trick.
A research study by Parks Associates evaluated insurance opportunities in smart homes and found that 33% of U.S. households with internet would switch their homeowners or renters insurance provider to access smart home devices and discounts. The study surveyed 8,000 people to evaluate how Internet of Things (IoT) technologies could impact insurance premiums or claims. They found many policyholders want to upgrade their homes and improve safety and security with smart home devices.
“Insurance is a highly competitive industry, with numerous companies offering similar products,” said Jennifer Kent, vice president of research at Parks Associates. “Customers often have multiple options to choose from, making it easier for them to switch to a different insurer. Smart home devices can lure customers from their existing insurance providers and attract customers who are new to the home insurance category.”
Many insurers already offer discounts for using smart home devices, increasing the competition for attracting new policyholders. The most common technologies used to fortify homes and nonresidential buildings include electrical wiring monitors, smart smoke detectors, security systems, water sensors and temperature monitoring systems, according to NerdWallet.
Smart home fire prevention
Electrical failures or malfunctions were the second leading cause of electrical home fires from 2015-2019, accounting for 13% of home structure fires, according to the National Fire Protection Association (NFPA). These malfunctions caused an estimated 390 civilian deaths and $1.5 billion in property damages annually. About three in five fire-related deaths happen in homes without working smoke alarms or no smoke alarms at all, according to the NFPA.
Smart smoke detectors and electrical wiring monitors can save lives and stop property damage by preventing fires in homes and commercial properties. These devices can detect loose connections, damaged wires, faulty appliances, smoke, carbon monoxide and more and alert policyholders of issues immediately.
Homeowners are recognizing the benefits of these technologies for fire prevention and are willing to switch insurers to access them, according to the Parks study.
Preventing vandalism and theft
The presence of a home security system can deter as many as 60% of burglars casing a potential target, according to a study by the University of North Carolina at Charlotte. Researchers interviewed more than 400 incarcerated individuals convicted of burglary, and most said they would move along to another target if they saw a house alarm. Installing an alarm system is one of the most crucial ways to mitigate the risk of property damage or loss of life in a break-in.
Home monitoring systems can involve smart locks, window and door sensors, video cameras, keypads, facial recognition software and other devices. These IoT systems can provide peace of mind for homeowners, especially when they’re away from home, and it’s no surprise policyholders are willing to try a new insurer to get one.
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