The smart home was all the rage at the 2016 CES (Consumer Electronics Show). The exhibit space and products devoted to smart homes was absolutely mind-boggling.
Well-known products such as the Nest Thermostat, the Roost Smart Battery for smoke alarms and Amazon Echo were displayed alongside a wide variety of other products to make every “thing” in your home smart. Want your refrigerator to assemble a grocery list for you by bar code scans of items about to run out? No problem – the Samsung Family Hub Refrigerator can do that. Looking for a bed with biometric sensors to track your sleep, monitor physiology and make adjustments to improve your night’s rest? Look no further than the Sleep Number-it bed. Need to separately monitor and manage the temperature and environment for each room? The Ecovent system has that capability – and can even alert you if your home is at risk for mold. The list could go on and on.
Given unlimited time and money, you could truly make your home an Internet of Things showplace with smarts everywhere you turn. Of course, you would probably not have enough room on your smartphone to manage all the apps that control the smart things. So how to make sense of all the options? And how should insurers capitalize on the smart home trend? For starters, it is useful to think of smart home devices in four categories:
- Security/Safety: Existing home security companies are all evolving to provide smarter systems using wireless technologies and more sophisticated sensors. In addition, companies like Ring and Glue provide smart locks and doorbells for secure entry. Others focus on safety through monitoring and pre-emptive alerts for leaky pipes, smoke alarms, failing sump pumps and other things.
- Entertainment/Information: Smart TVs are already a fixture in many homes, with availability from a variety of suppliers. The Amazon Echo responds to voice questions and prompts to provide news, weather and information, among other capabilities. Devices for gaming are incredibly powerful, and virtual reality headsets are gaining in adoption.
- Energy/Environment: The Nest Thermostat device has led the way in providing a smart, connected way to monitor and manage the temperature and environment throughout the home for comfort and energy efficiency. Others, such as Lutron, offer controls for lights, shades and temperature, aimed at saving energy.
- Commerce: The Amazon Dash Button may seem to be a gimmick, but it has opened up possibilities for e-commerce by allowing homeowners to reorder items with literally the touch of a button. Smart appliances and embedded touch screens automate the ordering of parts before they fail or common supply items before they run out.
Then come the questions about how (and even if) all of these devices will work with each other. There is a great deal of overlap and potential interaction between devices both within and between these categories. Enter the smart home hub. There are a number of companies and devices purporting to be hubs to connect the smart things in your home. Some operate well within just one domain – coordinating security-related devices, for instance. Others are broader and have the capability to connect a wider range of smart devices. The Apple HomeKit, Samsung SmartThings Hub and Amazon Echo are a few of the well-known hubs, but others are emerging.
The take-home is that insurers should consider three actions to better understand the smart home space and its potential opportunities and threats.
First, monitor the evolution of the companies and products in the space and the product adoption trends. It probably goes without saying that this is easier said than done.
Second, make sure your tech guys follow the standards, communication protocols and tech issues as they progress (especially related to data-security concerns).
Finally, actively partner with and invest in companies in the smart home space. First-hand learning and experimentation is paramount if you want to gauge the opportunities to offer new insurance product offerings or services that will set you apart from your competitors.