Technology and market competition are quickly reshaping the insurance industry as new telematics, smart home devices, apps and services transform how consumers select, sign up and engage with insurers.  

For homeowners’ insurance, companies from industry stalwarts like Nationwide to tech-infused new entrants like Hippo, VYRD, and Honey have been leveraging smart home technology programs to improve customer engagement and lower their risk through proactive monitoring for water leaks, sounding alarms, opening doors or other issues. 

While some of these programs reach a number of markets across the U.S. or other countries, many insurance carriers have still been in the early stages of testing or waiting to see the impact in the market from competitors before moving forward with their own smart home programs.  

For many, though, that all changed when State Farm announced its $1.2 billion equity investment in ADT for a 15% stake in the company with a focus on smart home technology to proactively mitigate loss caused by water, fire or intrusion. Once the largest home insurance company makes that kind of investment, a bar is set for the market in terms of consumer expectations for what a homeowner’s policy will include (hint: it’s smart home tech).  

The question for other home insurance providers sitting on the smart home sidelines then shifts from “Will this happen?” to “How quickly can we get to market?” 

Smart home: A top tech trend for insurance 

The State Farm/ADT deal and similar activity simply reflects the accelerating growth of the smart home market. According to recent data, there are more than 63 million smart homes in the U.S. – and that’s up 63% from just five years ago.   

As consumers add more connected devices and become more accustomed to the smart home experience, it becomes increasingly critical for insurers to focus on that opportunity. As The Data-Powered Insurer report from Capgemini noted: “35% of insurers gained competitive advantages from their investments in data and analytics, such as growth in premiums written and improvements in loss ratios.” 

This is the key for smart home tech in home insurance – benefits to both the consumer and the insurance company. Consumers get more visibility and control over their home while also helping to proactively head off major issues like damages, remediation and repairs for headaches like water leaks. Insurance companies can grow their number of policyholders while reducing their risk and claims payouts. 

In a recent example, one of Pepper’s home insurance partners, VYRD Insurance, was able to help policyholders to avoid 2,000+ water leak claims and save the company more than $3 million dollars in less than 8 months. That’s a huge savings for the carrier, but also helped its consumers avoid the hassle of leaving their house or living through the disruption of water clean-up and repair.  

Another Pepper insurance partner, Indiana Farm Bureau, saw a 5% increase in 12-month retention for policyholders using its Notion Sensors. This is especially important for insurance companies as they look to acquire, engage and retain younger policyholders.  

Accelerating your smart home program 

As insurers recognize the competitive landscape and customer value of offering a smart home program, a new challenge emerges: getting to market quickly. 

Rather than hire teams of developers, designers and other technical staff, insurers can work with Pepper’s full stack Platform as a Service (PaaS) to help them develop, manage and monetize smart home insurance solutions, including: 

• Rapid time-to-market – between Pepper’s PaaS, its Notion Sensors and home insurance experience, the company can quickly work with partners to build a differentiated smart home program and get it into market quickly. 
• White-label programs – Pepper recognizes that no two insurance carriers are alike so it offers custom packages, white-labeled app solutions, and customized marketing that can be tailored to your brand guidelines, desired marketing journey and overall customer experience. 
• Market-proven – Pepper’s IoT platform and sensors are the trusted tech behind smart home programs from Nationwide, Hippo, Honey, VYRD, Indiana Farm Bureau, and other insurance companies. 
• Customized smart homes – Pepper’s PaaS has the flexibility to build smart home programs with features and capabilities aligned to an insurance company’s goals while evolving over time, including the ability to monetize new features – such as video storage or cyber insurance – without additional development. 

Most importantly, Pepper provides the cloud scale to meet any demand for growing smart home programs combined with the security of a U.S.-based PaaS. 

The end game for home insurance is clear – smart home tech will play an increasingly larger role in policies and programs and drive consumer purchasing decisions. Pepper’s PaaS puts an insurer in control of a customized, branded smart home experience for their consumers that gets to market fast.  

Ready to accelerate your smart home program? Read more about Pepper’s PaaS or get details on our partnership with Nationwide.