As recently covered here at INN, Liberty Mutual announced it has joined Nest Safety Rewards, a partnership between Nest, the provider of connected home technologies owned by Google, and insurance companies to give policyholders discounts based on their Nest Protect device data.
Liberty Mutual joins American Family Insurance, which has a similar program with Nest. Policyholders participating in the program provide data on the device’s battery life, whether sensors are working, the state of Wi-F connections, policyholders’ zip codes, and rooms with smoke detectors. The insurers are offering discounts to participating customers of about five percent off their premiums.
In a statement announcing the service, American Family said it would provide the Nest Protect devices at no cost to participating policyholders, explaining these devices will monitor potential risks and allow users to check statuses, make adjustments and receive alerts, even when not at home, via a smart phone or tablet. “For example, Nest Protect ($99 retail value) speaks to tell you what and where the danger is, sends phone notifications, and tests itself to make sure it's working.”
This marks the early days of telematics for the home, in which, like cars, if safety is demonstrated via devices, discounts are provided. As they are with vehicles, insurers are gaining greater insights into policyholder risk factors, and are able to price that risk accordingly.
As with the automobile telematics programs that have proliferating across the industry for the past few years, there is an extremely valuable byproduct coming out of these programs, along with customer goodwill and loyalty: data. There will a lot of valuable information about policyholders’ home safety systems streaming in, with potential for mining and analysis patterns to better understand and mitigate risks be it fire, theft, flooding, or natural disasters.
Insurers are increasingly leading the way in moving to the so-called Internet of Things (IoT), in which data is streamed from devices all over the globe to monitor events and help make intelligent decisions, as well as drive down costs. (I also explored the opportunity for the industry in my most recent post.) As more information comes online from vehicles, homes and individuals themselves (through mobile and wearable devices), insurers are destined to become data companies. With that comes great responsibility, not the least of which is building and managing an infrastructure cloud-borne or with data centers that can maintain the security, quality and accessibility of the data.
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