The same goes for smart home technology which is being used to reduce risk and catch issues before they become claims, losses, or worse. While smart home tech is not a new concept, we’re seeing carriers adopt it like never before – and as a result, we’re seeing the true benefits this technology yields for carriers and policyholders alike. The digital evolution of insurance is well underway.
As we look ahead, 2023 is shaping up to be a year like no other when it comes to carriers adopting this technology. From using smart home tech to combat rising costs, to measuring risk, and even new opportunities through embedded insurance, 2023 will usher in a new era of carriers embracing digital tools. Here are my three predictions for how smart home tech will impact insurance’s digital evolution in the new year.
Combating rising costs
Amid the economic uncertainty surrounding the last few months of 2022, and rising costs of goods and services across the board, homeowners are always on the search for a good deal – especially when it comes to lower insurance premiums. Policygenius estimates the cost to insure a home rose 12.1% in 2022. On top of that, Realtor.com forecasts mortgage rates to remain elevated along with a 5.4% increase in home costs next year.
To combat these surging costs and entice homeowners, we’ll see more carriers embrace DIY technology to put policyholders in the driver’s seat when it comes to monitoring and helping to protect their properties – without breaking the bank. Including these products at the time of sign up not only adds value to insurance offerings, but also helps both parties cut costs long term by promoting a proactive approach to monitoring for damaging insurance perils like a burst pipe or sounding alarm. By leveraging DIY technology, insurance and technology companies can work together to provide homeowners cost-effective DIY smart home tech products, allow installation on their own time, and trigger premium discounts. Insurance providers are realizing lower prices and high installation rates are a winning recipe for greater ROI.
Measuring risk
From wildfires to destructive hurricanes, historic flooding and beyond, catastrophic weather events are on the rise. And carriers are paying the price. Aon estimates claims from global disasters will likely cost insurers more than $100 billion in 2022. And with the housing market in flux, it has become more important than ever for carriers to understand how to transfer and measure risk to stay 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 game. The data collected from tech like smart home devices is allowing carriers to become more forward thinking and use near real-time data to stay better informed vs. relying on what has previously occurred. Carriers now have data at their fingertips to help homeowners catch risks early and better prepare to avoid losses.
Embedded insurance
Mortgage rates and the uncertain housing market will significantly impact the insurance space next year. Because of this, new opportunities for embedded insurance will become critical in 2023. Carriers will realize the potential of combining insurance with technology and beyond to make insurance more affordable and easier to obtain for homeowners who are facing uncertainty of their own.
Taking embedded insurance to new heights will not only lead to increased innovation in the space, but also increased adoption and added value for smart home programs. This will allow carriers the chance to explore new types of embedded insurance including increasing the ease at which homeowners can sign up for a policy that fits their changing needs.
By embracing technology like smart home devices in 2023, carriers will continue their digital evolution which will play a key role in cutting costs for both their organizations and customers, more accurately measuring risk, and aid in the growth of embedded insurance opportunities. These are the trends that will move homeowners insurance further into the digital age, and advance the industry as a whole.
Source: Digital Insurance
