Connected, smart devices in the home are set to become an essential part of the modern household within the next decade, according to an Aviva-backed technology firm.
“Just like imagining a world without mobile phones is almost impossible now, I believe that in five to 10 years, imagining a home without three or four connected devices in it will seem very old fashioned,” Sanjay Parekh (pictured), CEO of Cocoon, told Insurance Business.
Cocoon works with a number of UK insurers, including Policycastle and Aviva – whose venture capital arm has invested in the firm – offering its AI-powered smart home security system to their policyholders.
As well as helping customers better manage their risks within the home, potentially reducing claims and ultimately insurance premiums, the technology also offers insurers a way to revolutionise their relationships with policyholders, according to Parekh.
“Traditionally, particularly with home insurance, it’s very price-driven and the only time insurers really interact with customers is when they make a claim,” he said.
“If you were to integrate our product into the home insurance proposition, you’d start to change that level of interaction. We have very high engagement levels – people typically interact with our app for about 1.5 minutes per day.”
By increasing customer engagement to a daily occurrence, rather than one that only happens at renewal time or when a claim is made, there is a chance for insurers to add value rather than just chase price.
“You can change the nature of your relationship with your customer, make it much more engaging for them, and start to build an interaction that is much richer than insurers are used to,” Parekh said.
Crucially, though, insurers today need to make sure they are offering an integrated proposition when it comes to utilising smart home devices.
“Gone are the days of just saying, ‘we sell home insurance and by the way here is this gadget.’ That’s really missing the point of what’s going on,” the CEO said.
By making connected devices an integral part of the insurance proposition, insurers can both change their relationship with the customer, and help the policyholder to avoid the inconvenience and disruption of having to make a claim.
“It just makes good business sense all-round, and is ultimately better for customer premiums. The sooner we can get the insurance industry to think along those lines, that home insurance is now much more than just insurance in the traditional sense, the better.”