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The Connected Home

Smart home telematics systems substantially reduce insurance costs

Ten years ago, the introduction of smartphones transformed us – practically overnight – into a connected society, drawing the Internet out of our homes and offices and into our pockets. Now, the Internet of Things (IoT) is ready to return home.

According to a recent survey by Gartner on Early Adopters of Internet of Things Poised to Make 2016 the Year of the Customer, “the number of businesses planning to adopt some sort of IoT strategy is set to grow by 50 per cent this year, a figure which would bring the overall total of businesses with some sort of IoT deployment to 43 per cent.”

ZDNet estimates that by the end of this year, there will be 6.4 billion devices connected to the Internet of Things, which means five million new devices being added every day. And this number could reach 20 billion (or even twice that) by 2020.

We are on the verge of the smart home revolution. Our homes will be connected to the Internet of Things and a vast range of remote and/or automatically controlled applications will help us organise and streamline our lives. This revolution addresses an extremely wide range of services ranging from automatically opening garage doors to enhanced automated climate control systems, from lighting and entertainment devices to advanced security systems such as smart door locks that monitor who enters the house, how long they stay and when they leave. Interestingly, this poses a series of new questions related to home insurance.

Home alarm and security systems not only allow insurers to provide home insurance discounts, but have also begun introducing smart home automation systems, which are set to become the fulcrum of telematics-based insurance policies. Indeed, telematics already provides various models for underwriting and pricing insurance policies based on remote data collection, such as the increasingly popular “pay as you drive” usage-based insurance solution provided by car and motorcycle insurance companies.

Octo Telematics, a pioneer and market leader in the automotive telematics insurance sector, has developed a smart home solution called Octo HomeBox, a self-installing device that will protect your home from fire, floods, electricity hazards and theft, 24 hours a day, all year around.

Based on Octo’s long-standing experience in the telematics insurance sector, the HomeBox immediately alerts both a central surveillance station and the homeowner as soon as a problem is detected. HomeBox can also be installed together with a surveillance video camera system.

The device not only allows users to communicate directly with the central surveillance station, but the system can also be managed remotely via an app that allows both real-time monitoring and management of the system.

Octo currently provides this smart home system to a number of insurance companies, including Groupama, Poste, Aviva and others.

Home Telematics will come of age rapidly and swiftly. Indeed, as a Deloitte survey entitled “Overcoming Speed Bumps on the Road to Telematics” revealed that while interviewees were initially not interested in being monitored whilst driving – under any circumstance – more than 50% suddenly changed their minds and were willing to forgo their coveted privacy in exchange for a discount on their insurance premiums. Chances are this very same trend will apply to telematics home insurance policies.

Just as a black box devices monitor driving behaviour and reward virtuous drivers, a home monitoring system reduces insurance costs for homeowners who regularly lock their doors and close their windows, keep their fire, gas and flooding detection systems regularly serviced and always on, do not leave appliances running when they are out of the house and regularly implement recommended maintenance on home utility systems and appliances. Telematics allows insurers to monitor a variety of home safety and security factors without having to infringe on household privacy. In fact, such a system would basically amount to an “all systems running correctly” alert system.

And, again, just as with drivers, it’s very often the homeowners who cause damage and accidents by leaving appliances on when they leave their house or by not having them regularly serviced. After all, what’s the use of a smoke alarm with a dead battery or a house with an alarm system that is not activated?

Moreover, homes just like cars can collect data and transmit it back to a central data analysis hub, providing invaluable information on, for example, specific local weather conditions or tracking the movement of storm fronts and fires, thereby fully functioning as a connected safety and alert hub in the greater Internet of Things.

Transparency Market Research has predicted that the smart home applications industry, which was worth US$3.6 billion in 2013, will grow to U$16.4 billion by 2019. Moreover, Gartner predicts that in addition to the 43 per cent of companies currently deploying IoT applications and services, 2016 will witness a 14 per cent growth in this area, while a further 21 per cent is setting out an IoT roadmap for the near future.

The security and safety systems market is currently slated to grow markedly, and the union between smart home applications and services and insurance telematics will make sure that our dinner is cooked and ready, the temperature is perfect and, of course, that everything is safe … and cheaper to insure!

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