Smart technology is expected to transform the home insurance industry, but a lack of consumers engaging with connected technologies is hindering progress.
That is according to research by LexisNexis Risk Solutions, which shows that three-quarters of UK home insurers expect smart technology to positively impact risk mitigation.
However, just 25% of homeowners currently use connected home technologies, with a perceived lack of value, and misunderstanding around how it works, cited as barriers.
This is despite 87% believing the insurance application process could be made easier by reducing questions – something that could be made possible with the technology.
“We believe smart home technology data holds huge potential for home insurers,” LexisNexis UK and Ireland director, Jay Borkakoti, said.
“Our research suggests insurers could be as influential as friends and family in encouraging homeowners to consider adopting smart home technology.”
Borkakoti went on to say the technology could be used in the same way a telematics data device installed in a car can inform insurers about emerging faults and driver behaviour.
“This connected technology has the potential to shift the function of insurers from paying out claims to averting the claim arising in the first place,” Borkakoti continued.
“The potential is particularly exciting when you consider the drain on the industry through escape of water claims – £667m in 2016.”
The research also shows that 81% of insurers believe they will adopt smart technology, while 85% believe data analytics will be transformational in the next year or two.
In addition, it was found that managing profitability is currently the main key focus for UK home insurers, with 81% of those studied confirming this.
Better managing the risk profile of their books, managing increased price competition, improving the end-to-end claims process and enhancing customer experience complete the top five priorities.
“Combining data from smart home technology with advanced analytics will help home insurers achieve better risk profiling resulting in more accurate pricing – all of which support the home insurer’s profitability goals,” Borkakoti concluded.
There were a record 66 InsurTech investment deals recorded in the first quarter of this year as insurers continued to look to start-ups to improve their claims handling and underwriting excellence.
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