How Smart Is a 'Smart Home'?

The business case for smart homes has yet to be made. 


Connected, or "smart," homes have been in the news lately—but not always for the best of reasons.

Google had to issue an alert about the need to strengthen passwords on its Nest security cameras because a disturbing number were being hacked. One hacker spewed racist epithets into a family's living room. (It's not bad enough that you've hacked into their homes?) A second hacker peered into a baby's room. Another report says that hacker also turned up the family's Nest thermostat. In what strikes me as a less-than-savvy PR move, Nest blamed the users. It said their passwords had been hacked independent of Nest, and the users were at fault for using those same passwords on their Nest devices. 

But privacy concerns—the bugaboo of our age, it seems—aren't slowing interest in the space.

Systems for detecting water leaks, from companies such as Roost, were prominent at the Consumer Electronics Show in Las Vegas last month, and they have made progress. Some can now simply be attached to the line coming into a house and can detect a leak anywhere in the system. The sensors can automatically shut off the water when a leak is detected and can alert your smart phone. 

Funding continues to pour in to startups in the space, such as Kangaroo (simple motion sensors), Wyze Cam (security cameras) and igloohome (smart locks). Aviva provided some validation by announcing in November that it was buying Neos, a startup offering an array of smart home devices. 

The profusion of smart assistants in the home—notably the Amazon Echo, Google Home and the Apple HomePod—also gives smart devices a hub so they can easily relay information to your phone, to a home security monitor and so on. Those assistants greatly simplify some technical issues and should mean, for instance, that someone like the Allstate Mayhem character won't actually be able to stare into the camera in your Amazon Ring doorbell and dare you to watch as he steals your car. He might be caught by alert authorities before he even left the driveway. (Great ad, though, right?)

But I think the business case for smart homes has yet to be made.

I confess to being jaded because I've been hearing about smart homes since the early 1990s. I even knew people who, based on the far-more-limited technology available at the time, wired their homes so they could, for instance, control the lights remotely and simulate normal use even while on vacation. (That's what happens when you hang out with Silicon Valley types who have more money, time and technical expertise than they know what to do with.)

I think we'll get to smart homes. But I'm waiting to see major insurers decide that, say, the water leak sensors are so inexpensive and can reliably prevent so many leaks that it's worth cutting rates for everyone who has one—without making me vulnerable to some hacker who wants to curse at me, watch my kids and play with my thermostat. We're not there yet.

Have a great week.

Paul Carroll

Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993.

Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.


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