Fintech Insurance Tech

The standoff between insurance and technology continues

The standoff between insurance and technology continues. Photo: Denys Prykhodov, Shutterstock.com
Written by Thomas McCourtie

Insurers must awaken consumers to the benefits of smart technology use in the home, says Thomas McCourtie.

Smart technology in the home, otherwise termed the “connected home”, is the latest range of products and devices to develop an affiliation with the UK insurance industry. Currently, we’re seeing several energy and utility providers developing various new products designed to improve the approach to risk in residential properties. Insurers are beginning to realise how the better management of risk can be reflected in the insurance policies offered to those embracing these devices. However, the main issue lies in convincing customers of the benefits of smart tech in the home, as many remain unimpressed and are reluctant to make the transition.

Consumers have been quick on the uptake of most other smart tech products and have managed to seamlessly incorporate these devices into their lives. From smartphones to tablets, these are everyday items for the modern consumer and some would consider it extremely difficult to be without; to be “unconnected”, even if just for a day or two.

Yet, most consumers are unwilling to buy smart home technologies despite there being huge potential in this area and the easy compatibility of these items with the smart products they already own. This is due to a lack of understanding and interest in products that encompass the concept of the Internet of Things, according to a new survey from professional services consultancy PricewaterhouseCoopers (PwC). The group found 72% of people surveyed were reluctant to adopt smart home technologies over the next two to five years, and were unwilling to pay for it.

Mitigation of damage risks

Products that have been launched over recent years in the smart home space include British Gas’s Boiler IQ, which automatically notifies users of a boiler fault via text message, and HomeServe’s water leak detector LeakBot, which provides a similar function but informs users of any water leakages or problems with the property’s main water supply. Both could assist in the overall maintenance of a property’s functions and help in the mitigation of damage risks. Such devices also bode well for home emergency insurers in terms of helping to reduce the number/cost of claims in this market, of which water leakage was the second-highest type of claim in the property space, with 316,000 claims, according to the Association of British Insurers.

It seems partnering with the product developers and subsequently offering policy discounts may not be enough to entice consumers (see ‘Zurich backs smart technology in UK homes‘), and insurers must do more to provide better information to their customers. Most are still struggling to comprehend the range of smart home products on offer and therein lies the challenge for insurers: to help those with a real lack of knowledge understand. Insurers must devise a strategy to help consumers recognise the potential these products have to ease their busy lives and reduce their energy bills or their insurance premiums.

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– This article is reproduced with kind permission from Verdict Financial. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo: Denys Prykhodov, Shutterstock.com

About the author

Thomas McCourtie

Thomas McCourtie is an analyst within the general insurance team at Verdict Financial. He has a fintech background, and focuses on the commercial insurance sector and the growing influence of automated product distribution platforms.

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