Claims Club News: Connected-home devices could cut claims costs

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Insurers can proactively reduce their claims costs by encouraging the uptake of connected-home devices, according to Ninety Consulting’s Geoff Knott.

Addressing delegates at Post’s Q4 Claims Club, Knott said systems such as British Gas’s Hive, Google’s Nest and the Wally water leak detection device could allow insurance companies to use “real‑time telemetric data” to calculate home risk.

“You may be familiar with telematics capabilities in cars and, from that, you can create more accurate risk profiles, leading to personalised policies that reflect actual car usage and how the car is being driven. Such devices are now penetrating the home market,” he said.

Knott added that despite these devices traditionally being seen as “niche solutions for the wealthy” – such as complex security systems – they are now becoming products for the mass market.

While the US is leading the way in this area – with market penetration of telemetric devices predicted to reach 31.4 million homes by 2017 – the technology is expected to enter a sizeable 17.4 million homes in Europe by 2017, leading Knott to suggest there is significant opportunity for insurers.

According to Knott, the future claims implications go far beyond the connected home, to areas such as lifestyle and health.

However, there are several issues from a claims perspective, such as the risk of system hacking and having a single data point in a smartphone, which would make the consequences of the loss or theft much more severe, he said.

In addition, unlike motor telematics, a multitude of different connected-home devices exist, each recording different data. Knott suggested the creation of a data aggregator is needed to bring all the data together to be shared with insurers.

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