From automated telematics to using satellite imagery to assess the risk profile of homes, operators are turning to technology to optimize offers and operations, reduce costs and improve the overall customer experience. The same goes for smart home technology, which is used to reduce risk and resolve issues before they become claims, losses, or worse. While smart home technology is not a new concept, we are seeing carriers adopting it like never before, and as a result, we are seeing the real benefits that this technology brings to both carriers and policyholders. The digital evolution of insurance is in full swing.
Looking ahead, 2023 promises to be a unique year when it comes to carriers adopting this technology. From using smart home technology to combat rising costs, to measuring risk and even new opportunities with built-in insurance, 2023 will usher in a new era of operators using digital tools. Here are my three predictions for how smart home technology will impact the digital evolution of insurance in the new year.
Fighting rising costs
With the economic uncertainty associated with the final months of 2022 and the rising cost of goods and services everywhere, homeowners are always on the lookout for a bargain, especially when it comes to reducing premiums. Polygenius estimates The cost of home insurance rose by 12.1% in 2022. forecasts Mortgage rates will remain elevated along with a 5.4% increase in home prices next year.
To combat these rising costs and attract homeowners, we’ll see more carriers use DIY technology to put policyholders in the driver’s seat when it comes to monitoring and helping protect their property – without breaking the bank theft. Including these products at the time of registration not only increases the value of insurance offers, but also helps both parties reduce costs in the long run by promoting a proactive approach to monitoring dangerous insurance risks such as a broken pipe or sound alarm. Using DIY technology, insurance and technology companies can work together to provide homeowners with cost-effective DIY smart home products, allow for free-time installation, and receive premium discounts. Insurance companies are realizing that lower prices and faster installation times are a winning recipe for higher ROI.
From wildfires to devastating hurricanes, historic floods and more, catastrophic weather events are on the rise. And carriers are paying. And he estimates Global disaster claims are likely to cost insurers more than $100 billion in 2022. And with the housing market constantly changing, it has become more important than ever for carriers to understand how to transfer and measure risk in order to remain competitive in this uncertain economy.
For decades, the insurance industry has relied on historical data to make decisions and measure risk. Today, technology is changing the rules of the game. Data collected through technologies such as smart home devices allows carriers to become more forward-thinking and use near-real-time data to be better informed rather than relying on what has happened before. Carriers now have data at their fingertips to help homeowners detect risks early and better prepare to avoid losses.
Mortgage rates and uncertainty in the housing market will have a significant impact on the insurance space next year. As such, new inline insurance capabilities will be critical in 2023. Carriers are recognizing the potential of combining insurance with technology and other technologies to make insurance more affordable and easier for homeowners who face their own uncertainties.
Taking embedded insurance to the next level will not only lead to increased innovation in this area, but also to greater adoption and added value of smart home programs. This will give carriers the opportunity to explore new types of inline insurance, including increasing the ease with which homeowners can sign up for a policy that meets their changing needs.
By introducing technologies such as smart home devices in 2023, telecom operators will continue their digital evolution, which will play a key role in reducing costs for both their organizations and customers, measuring risk more accurately and expanding embedded insurance capabilities. These are trends that will propel homeowner insurance into the digital age and drive the industry as a whole.