The Untapped IoT Potential In The European Commercial Insurance Industry

By: Linsey Miller*, Senior Vice President of Business Development and Strategic Marketing at Resideo

Most of us would agree with Ben Franklin’s notion that 'An ounce of prevention is worth a pound of cure.' Or in other words, the American inventor meant that it’s easier to prevent a disaster from happening than to deal with the disaster itself. It's a topic the insurance industry has been grappling with recently as it begins to harness connected solutions.

This discourse was certainly evident at the recent Insurtech Insights Europe 2024 event in London where I engaged in meaningful discussions about how smart sensing technology and IoT can shape the future of the European insurance sector. Those discussions all came down to the same central point: delivering better outcomes for customers.

Real-time IoT is used in healthcare and automotive for better outcomes and should already be happening in the commercial insurance category. From an insurer's perspective, data sharing can reveal untapped potential, which includes profitability from lower costs and higher productivity, and fewer losses.

To be clear, I don’t think any insurer can afford not to lean into IoT. First of all, in a fast-moving, connected world, sticking to the way things have always been done can be the riskiest place to be. And secondly, focusing on solutions that will proactively go beyond detection and into actuation to achieve the right outcomes is a great place to start.

But how do insurers harness IoT in a way that benefits everyone and makes infrastructure investment sense?

Changing the commercial insurance game for multifamily properties

Cutting insurance and maintenance costs for property managers and connecting a block of flats to create a smart/connected community, could lead to better property value as, with the right actions taken, the risk of mold and moisture damage is reduced. As an example, our sfty by Resideo team offers a system-based approach to protecting whole-building community safety and assets in apartment blocks. This gives building managers and owners smarter ways to control and monitor connected water leak sensors for several apartments,and supports effective building evacuation strategies through early smoke and fire detection. This is game changing for all concerned:

• The families who live in the apartment blocks and want to feel safe – and that's a lot of people across Europe! Eurostat – the statistical office of the European Union – outlined that in 2022 nearly half of the EU population (47.5%) lived in a flat, while in cities it rose to nearly three out of four people (72%).
• The property managers who don't want to rely on outdated manual processes for the health and safety of their buildings and residents who need real-time systems and data to connect communities and protect assets.
• The Insurers who want to prevent costly claims from arising rather than paying out after the event. For example, according to the UK's Association of British Insurers (ABI), the escape of water damage is one of the most common types of domestic property damage claims, with UK insurers paying out £1.8 million for it every day. And in 2022 Norwegian insurance companies paid NOK 5.6 billion in damages in this category.

Entering New Residential IoT Phase

But just how attractive are IoT devices to insurers and home users? Recent US research shows that smart home devices can lure customers away from their current insurance providers.

Current residential IoT device adoption is crossing the bridge from 'early adoption' into 'mass market' adoption. According to Parks Associates, we’re in the Early Majority stage: consumers can relate to the new technology, yet they still need proof of value. While we've reached a critical mass for deployed sensors and devices that can better mitigate risk in homes, at this stage consumers' motivation to purchase is based on practicality.

This is underlined by the recent Insurance Opportunities in the Smart Home research, also from Parks Associates, that found that one-third of U.S. internet households with homeowner’s/renter’s insurance would switch providers to acquire smart home devices. With insurance costs rising, homeowners and insurers are both looking for practical solutions to reduce premiums, claims, and payouts.

This adoption trend should correlate to commercial markets as well, because having smart home features in the multi-family sector could have a direct correlation to increasing net operating income, and therefore property value for residences under management.

Moving from detection to actuation can lead to better business outcomes

I think we all know prevention is better than "the cure." Moving from detection to actuation is something that should already be prevalent for commercial properties today.

Water leak detection is a commonly deployed use case because it is powerful: Resideo's water leak detectors have already helped consumers save millions of gallons of water and avoid millions of dollars paid out in insurance claims.  

However, beyond water use cases, there is so much more untapped potential in the commercial sector including equipment uptime and repair, to AI-powered video-enabled security, and energy efficiency use cases. Resideo offers solutions that help predict HVAC system failures and even provide specificity on the types of parts needed for service when maintenance is deployed. The technologies already exist to solve those problems today, but they are not deployed at critical mass levels across the landscape of IoT and insurance yet.

Beyond prevention, the untapped potential lies in the business outcome of lower operating expenses, better utilization of assets, and increased profitability commercial insurance companies can deliver to their policy holders. How do we know that? Because as my fellow panelists and I discussed, the data is there. For example, Resideo has more than 11.6 million connected customers worldwide and we have processed hundreds of billions of data transactions last year on our services for homeowners and providers. If we partner to combine the data in a way that is safe for the policyholder with their consent, we can unlock a wealth of better outcomes that transcend just protection of assets and crosses over into enabling business success for multifamily properties, together with the most innovative insurance partners.

It's really three steps: detection, prevention, and proactive business outcome improvements.

Commercial insurance offerings haven't reached their potential in the 'outcome improvement' stage – but it can be done! It's the secret sauce for insurance value creation that seems to have been used primarily internally, but it can unlock great value used externally for policyholders.

I continue to be impatient for the future… but honored to work with partners in this sector, including the most innovative insurance companies, insurtech partners, IoT manufacturers, PropTech providers, professional property managers, real estate owners and consumers. Together, we can walk through the open door of progress, and harness the proven potential of prevention enabled by IoT.

Wouldn't Ben Franklin be proud?  

Linsey Miller*

Linsey Miller is the Senior Vice President of Business Development and Strategic Marketing at Resideo and Board Director at Home Connectivity Alliance. Linsey has a proven track record of leading growth for large technology companies, experience starting up new business, managing P&L, leading strategic growth and turnaround teams for private equity-owned and publicly-traded companies. Linsey's specialisms include: consumer electronics, energy efficient power infrastructure, data centers, enterprise and telecom computing.

Before Resideo, she worked as Vice President, Data Center Computing and Telecom & Networking Global Sales at Advanced Energy, Vice President of Product Management and Marketing, Embedded Computing at Artesyn Embedded Technologies, Director Business Development at Emerson Network Power. 

Linsey completed an advanced management program at Harvard Business School, and earned an undergraduate degree from The University of Texas at Austin. 

See Also:

How to Help Prevent Water Damage by Shutting it off at the Source

Resideo Expands Relationship with USAA to Help Homeowners Protect What Matters Most

Getting Smarter: Nationwide and Resideo join Forces to Fortify and Help Protect Homes