- Connected Home
- Home Energy Management
Insurance Companies Expand into Energy Management to Mitigate Risk
Insurance companies are starting to get smart about the smart home and energy management. Though these companies are in the very early stages of participation in this market, interest has been piqued and insurers are starting to partner with vendors to offer consumer energy management and connected home solutions. For example, State Farm has partnered with ADT Pulse and Generac to offer consumers discounts for home energy products and services. SmartThings, before it was acquired by Samsung in August 2014, had partnerships with four of the 10 largest insurance companies, including American Family Insurance, which joined with SmartThings and Microsoft to create a smart home incubator in Seattle.
Insurance companies can find value in data from connected devices by detecting issues and alerting homeowners before catastrophe strikes, especially with large appliances and HVAC equipment. They can also use them to develop more informed policies and offer discounts for adopting these technologies. Energy management is especially appealing to insurance companies because it allows residential customers to remotely monitor and control a range of connected energy devices such as thermostats, lighting, appliances, and electronics, which can be useful in powering down devices during emergencies and even deploying backup power during outages.
Insurance providers in particular have an incentive to offer these types of solutions because it can avoid costly payouts. A monitored, controlled, and automated home that can better mitigate risk and avoid disaster can save insurance companies a significant amount of money in avoided insurance claims.
While insurance providers have reason to offer consumers these solutions, they are not the only non-utility companies interested in energy management. In recent years, companies outside the traditional energy industry have engaged in this space and found value in offering energy management solutions as part of connected home offerings. These include companies such as AT&T with its Digital Life platform, Comcast with its Xfinity Home offering, and Vivint Smart Home. As Alex Hawkinson, CEO of SmartThings, has said, “The number of services that could be spun out of this is limitless. You can pick industry after industry. The ramifications of making the entire world self-aware are simply massive.”
These new players are just beginning to unlock the possibilities of connected homes to provide increased energy efficiency, comfort, and control. There is something happening in this space, but it is still in a very early stage of development. Many major insurance providers are interested in the smart home, but most are still exploring where they can find value in energy management. Expect to see more engagement from insurance companies in the near future.