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The robots are coming – how will insurance cope?

The robots are coming – how will insurance cope? | Insurance Business

The robots are coming – how will insurance cope?

A decade ago, the notion of asking a voice activated assistant in your home to turn on a light switch or select a favourite tune was as far removed as popping to the shops in a flying car: a nice idea in theory, but a distant and remote possibility. Fast forward to 2018, and Alexa’s and Siri’s are as ubiquitous in households across the country as microwaves and televisions. On wedding registry lists, smart speakers have surpassed household staples such as cutlery and glassware as the “must have” gifts for millennials. A decade from now, will voice activated devices seem old hat, more iPod (remember those?) than iPhone? Given the future has a habit of catching us out by surprise, will newlyweds in 2028 have a home robot on their wishlist?

If Big Tech has its way, it’s entirely possible. With robots firmly entrenched in factories, a breakthrough in home robots is plausible in the coming decade. If robots are vacuuming floors, restocking the fridge, and retrieving household items, is a shake-up in the home insurance market likely?

Insurers have reams of data on homeowners and their likelihood of making a claim at any one given time, not to mention which items are most likely to be claimed. Their data is a patchwork quilt of human behaviour. It’s possible that this tried and tested model could change with the advent of home robots. How insurers will calculate the risk of a home robot relative to not having one is still very much an open question. Insurers may calculate over time that having a robot in the home correlates to a reduction in claims for appliances, and pass on such savings to consumers in the form of lower home insurance premiums. In theory a robot shouldn’t be susceptible to the same human character traits which can cause accidents in the home – tiredness, carelessness, even illnesses.

But this assumption rests on the robot operating faultlessly. In a widely publicised incident at an Amazon factory in the US last month a spray-painting robot malfunctioned, causing damage and injuring 24 employees. Consider the insurance implications if a robot went AWOL in your home: scratched skirting boards, a broken vase, or even structural damage. In this nightmarish scenario, is the robot manufacturer liable, or the homeowner? The comforting news is that it is in everyone’s interest – homeowners, robot manufacturers, and the insurance sector – to avoid a dystopian future of robots going rogue in the home.

Having more sensors and robots in the home could make some repair costs more expensive, which would likely be reflected in higher insurance premiums. The car insurance market is a case in point, where claims for windscreen repair costs have doubled over the last five years as a result of anti-crash sensor technology being fitted to more vehicles.

The flipside is, of course, that an increase in cost to prevent a crash from happening to begin with is a price worth paying. Moreover, there is evidence that technology sensors can lower costs from the offset, by assisting in tackling the big causes of claims, such as water damage. Sensors could alert a homeowner to when a leak has occurred, preventing one of the more expensive and emotionally distressing home insurance claims from getting out of hand. It’s a win-win for insurers and their customers to offer advice about what kind of technology makes a difference in terms of risk – and what kind of technology will add cost to their premiums.

It is worth noting that the global media attention paid to the Amazon robot that went haywire was in part because such cases are notably rare. It may well be that home robots become a mainstay of homes across the country and the home insurance market remains much as it is today. Ascertaining whether home robots increase or decrease the relative risks for homeowners remains to be seen - but quantifying those risks will certainly keep insurers busy.