In the month of July 2018, I had a conversation with my Insurance provider (home and auto). They were pushing an auto telematic device to me to save $50 in premium. I asked what they will do with the data and what kind of data would they be collecting. The answer was ‘my driving record’. Did that mean they would know how many times I kind of stopped, but not completely, at the stop sign? Yes, they said and based on that they will re-calibrate my premium upwards or downwards after 6 months. I said thanks but no thanks – I did not want that kind of data anywhere including a cloud.
But I asked if they had something for my home. I wouldn’t mind deploying something to protect my home from water damage or fire if that brought the premium down. After all, if that data is real-time would help me prevent damage to my property. Win-win for me and insurer as they get to save on a claim. They said ‘Sorry’. And that bugged me. Why wouldn’t a carrier offer me something for safety and protection especially if it helps them in the long run? That feeling is what made me start Purple Ant because it’s a matter of time before carriers realize that, by offering this device, they are building a positive relationship with the insured. This feeling is what will prevent homeowners from shopping for another carrier at the time of renewal, and that’s why I think the time for home telematics to go mainstream is now.
Why is this important for the carrier?
Currently, brand stickiness is an issue for the carrier. Right now, insureds interact with insurers twice – once while buying/shopping for policy and again when there is a Claim. While buying may or may not be a positive experience, claims is often a negative experience, regardless of how well the carrier does at handling it. Whether you settle a claim in an hour or 10 days, you’re still going to be overwhelmed due to whatever you lost. So, if carriers are looking for ways to have insureds engage with them in a way that provides for a positive experience, this is it!
Today most carriers insure the property and not the insured, and that’s because there aren’t many ways to measure how the insured maintains a property. If they did, they could factor that in their underwriting algorithm. While devices like Nest, Alexa add-ons, and ADT-type security options are all somewhat indicative of these behaviors, there is no way for the carrier to get that data – even if they wanted to.
How do we do this?
We at Purple Ant are solving this problem in the following manner. What if we could incentivize the insured to activate the telematic devices in return for a credit and have the Insurer deploy the devices at a cost that’s less than the premium that they collect. Hey, that’s a win-win for insured and insurer, right?
Win for Insured because they pay nothing, instead of getting credit and a piece of technology that provides peace of mind while they are away.
Win for Insurer because it’s affordable (no capital cost, a small monthly fee) and results in high Net Promoter Score (NPS), thereby greater retention. Subscription-based pricing model also ensures that carriers do not have to pay when the policy becomes inactive or insured switches to another carrier. There’s also the prospect of Loss Prevention – this is because most water damage is due to the leak not being detected on time. However, time and data will determine the extent of the save.
Is Device technology important?
Currently, the market is fragmented with multiple communication protocols like WiFi, Zigbee, Z-wave, and LoRA being used by different players. The compatibility becomes even more complex as different hub manufacturers use their own back-end cloud to capture and share the data with users. We have attempted to address this fragmentation by becoming device and communication protocol agnostic and by offering a combination of communication protocol and hubs that best fits the plan configuration of the house. Having an agnostic, multi-tenant cloud-based back-end, the data can be collected and analyzed for the carrier regardless of the hub type and communication protocol. We think that being technology agnostic approach is prudent given that the pace of IOT technology evolution is likely to increase and so locking down on a specific technology may not be prudent.
So, will 2019 be a game changer for home telematics adoption by the carriers?