Initiation of an insurer connected to the Matter smart devices protocol
Why insure connected homes?
Connected home insurance has three pretty compelling value propositions:
- The insurance industry can show policyholders and society as a whole that it does more than collect premiums and pay claims
- A connected home can have less or less severe loss – i.e. impact loss rate through loss prevention and mitigation
- An insurer can use sensor data from the connected home to develop better products, price more accurately, underwrite more efficiently, and adjust claims faster and more accurately.
But why has the growth and impact of connected home insurance been . . . gradual?
From a homeowner’s perspective, there are many things that could be connected (entertainment systems, heating/plumbing/electrical systems, appliances, lighting, exterior windows and doors, outdoor spaces, and last but not least assistants virtual (Alexa and friends) Many owners find setting up and using it all to be a daunting proposition.
This challenge is compounded by the fact that many devices currently do not work and do not work well together – in technical terms, they lack interoperability. In other words, some connected objects communicate with a hub and can be controlled directly with a single application; but other connected items may talk to another hub and require a second app. (Okay, someone with the skills and the inclination can usually overcome this, but that’s a subset of a subset of the owner population.)
For years, many insurers have encouraged the installation of connected home devices by offering discounts on purchase prices, or by sending devices directly to owners, or by offering a reduced premium – for example, here and here.
From the perspective of insurers, there is an important distinction between connectivity in a home and connectivity from a house.
- If the devices are correctly installed and connected in home, insurers will capture some of the benefits of the first two value propositions (improved image and reduced losses)
- But to achieve the third value proposition (having data, analyzing it and using the results to improve products, prices, etc.); data must flow from devices connected to the insurer (or to a data exchange).
Either way, for insurers to realize the benefits of value propositions, it needs to become easier for more homeowners to make their homes a connected home.
Matter is coming and should help
Question is a communication protocol designed to enable out-of-the-box communication between smart home devices, mobile apps, and cloud services.
Matter is developed by the Connectivity Standards Alliance (ASC). CSA brings together a very impressive list of more than 200 technology, manufacturing and retail companies, led by Amazon, Google, Apple, Comcast, Samsung SmartThings, Resideo, IKEA and others. CSA develops standards, certifies that devices meet those standards, and promotes those standards.
Matter is designed to provide easy and accessible connectivity to everyone (just by scanning a QR code) between devices, hubs and ecosystems that have been certified by Matter.
Matter is close to, but not quite ready for general availability. The final “development gate” is expected to take place this summer. Even before the launch, Matter enjoys extensive media coverage – for example hereand here and here.
What home insurers need to do
- Understand what Matter will do and how quickly it will change the connected home segment
- Plan for connected homes by Matter
- Enrich or create new connected proprietary products
- The most challenging, but most rewarding step: developing ways to leverage Matter to realize the third value proposition: capturing, analyzing and using data to improve the entire value chain: product development, pricing, underwriting and claims.
This blog entry has been reprinted with permission from Celent.