Feb 03, 2016Just as automobile insurance providers are using connected devices in their policy-holders' cars to better understand their driving habits, home insurance providers are looking to leverage smart-home products as a means of better understanding homeowners' actuarial risks, while also providing them with new types of services. Or at least, that is the premise on which ROC-Connect, a smart-home platform provider based in Silicon Valley, is launching ROC-Master, a managed service that leverages the company's cloud-based smart-home platform.
The ROC-Master service for insurers is focused on tapping into three risk areas: flood, fire and security. Insurers will provide their customers with a suite of smart-home devices, such as leak detectors, connected fire alarms and home security devices, such as electronic locks for doors and windows. They will also provide the ROC-Connect hub to manage and network those devices, as well as a branded version of company's consumer-facing application.
In the event that the connected devices generate any alerts caused by smoke or leaks, or if the security system triggers an alarm, the policyholders will receive notices on an app running on their smartphones. In reciprocation for having armed their homes with these systems designed to reduce the damage that flood, fire and theft could cause, the insurer would most likely offer premium reductions to these policyholders. Additionally, insurers can use the app as a communication tool for offering periodic tips, such as how to prepare for severe weather, or a springtime home-maintenance checklist. They could also use the smart-home service as a platform for selling additional services—for example, extra home security monitoring while the policyholder is on vacation.
ROC-Master "lets the insurance company be more responsive [to risks] than they would be otherwise, and this reduces the insurer risk," says Kevin Meagher, ROC Connect's VP of business development. "This is not new—insurers already offer discounts if you have a home security system. But with ROC-Master, I think insurers will offer heavier discounts, because they do not have to take your word that you have a working fire alarm. They'll now have the data showing that it is installed and the battery works."
Meagher, who joined ROC-Connect last summer after spending nearly four years launching Lowe's Iris brand of smart-home products and services, says insurers were interested in incorporating smart-home services into their products back when he was working for the retailer. And this interest, he says, has spiked during the past six months, culminating with the Consumer Electronics Show (CES), held last month in Las Vegas.
"At CES, every major insurance company was there, and we met with many of them," Meagher says. He believes that in addition to helping insurers better gauge risk, the smart-home value proposition is using that new level of passive connectivity to "reinvent the relationship with the consumer."
At present, Meagher says, homeowners view insurance as a commodity. "We deal with them once or twice a year when we pay our premiums," he explains, "and then we hope we won't talk to each other again until the next payment—because if we do, that means there's a claim."
This also means insurers must spend significant resources to retain policyholders and prevent them from simply shopping for the best deal each time their policy comes up for renewal. Meagher thinks connecting with policyholders through a smart-home platform will make the insurer more valuable to consumers. And as with auto insurance, he adds, the data collection that home insurers will be able to access via the smart-home platform is hugely valuable in terms of showing usage trends and informing their actuary knowledge bases.
Without disclosing the names of the participating insurers, Meagher says ROC-Connected is involved in a few field trials of the ROC-Master offering.
The ROC-Connect hub connects any standard ZigBee, Z-Wave, Wi-Fi or Bluetooth device to the company's cloud-based servers. (In South America, ROC-Connect also sells the Ozom brand of smart-home security cameras, thermostats and other connected devices, through home-improvement retailer Sodimac.)
ROC-Connect is offering the hardware components for $150 or less, per policy. Insurers may choose to resell the firm's hub and smart-home devices to policyholders, or to provide them as an extra incentive. The insurer would then pay ROC-Connect a management fee for the connectivity and branded app, Meagher says.