Smart phone technology to push up premiums

Smart phone technology to push up premiums | Insurance Business

Smart phone technology to push up premiums

Smart phone apps are sweeping the nation but it’s not just the latest version of Evernote or Angry Birds that’s gripping techies, it’s smart phone apps that control home appliances.

From apps that unlock front doors, to programmes that control light switches, life at home is set to get a lot easier – and you don’t have to be at home to enjoy it.  But what does this mean for the future of home insurance?

Experts say the greatest impact could be on premiums.

“The rapid expansion of smart phone apps does have the potential to have some impact on a customer’s home policy in the not too distant future,” Cohen Quinn, home portfolio manager with Vero. “The primary opportunity appears to be in the area of improved customer experience.”

 “The equipment required to allow customers to control their household items via their smart phone is not inexpensive at this point in time, and therefore would add to the value of their contents and thus their sum insured.”

Gavin Pearce, director at Deloitte, said home technologies would impact home and contents insurance, particularly in the claims space, if it became commonplace in Australia.

“This sort of technology would have to be widely used in homes before it wold have any impact on home and contents insurance but once it reaches critical mass, the issues are what impact would it have on the frequency and severity of claims. Depending on how secure the technology is, could other people hack those systems and gain entry to houses than they ordinary can do. This would impact home burglaries.”

But such technologies could also reduce the number of home and contents claims. “If this sort of technology would include more elaborate security systems that would dissuade burglaries and alert home owners quicker to potential fires.

 “In terms of the severity of claims, if the hardware installed in the house is quite expensive, that would add to the cost of replacing the house. The other issue is if there was failure with the system, would that cause any property damage?”

Others have looked to the impact that current security technologies have had on the market.

Gary Gribbin, director at Insurance House and IBNA director, said insurers had not created significant discounts for enhanced security features such as deadlocks and window locks and so it is unlikely future home technologies will have an impact.

Turning to the use of smartphone apps to control home devices, Gribbin said: “I don’t see that such apps will have any material effect on insurance cover. Their use will not make a risk better but it will not make it worse. Ultimately the apps are not much different to what we have now, insofar as they are not fool proof and are subject to human error.”