Authored by Martha Notaras, Partner, XL Innovate and Brett Jurgens, Co-Founder and CEO, Notion
Insurance and risk management are changing. Thanks to advances in technology, the focus today has shifted more toward preventing losses instead of just paying for them. The Internet of Things and the power of connected sensors has enabled property owners to monitor their buildings 24/7 and manage risks in real time.
Homeowners have really driven the demand for smart systems, which exploded in popularity primarily because of their convenience. “Smart homes” keep homeowners in control no matter where they are. With a few taps in an app, owners can adjust their thermostat, turn off the light in the bedroom, turn on some music to keep the dog entertained, or check to see if they left the garage door open – all from miles away.
Connected security devices are one of the most common smart home applications. According to Statista, the number of homes using smart home security devices is expected to increase 287% from 12.8 million in 2017 to 36.7 million by 2023. In other words, in the next three years, more than a quarter of US homes will be using home security devices.
The advantages of IoT are not just for homeowners. For owners of small businesses and other commercial properties, IoT-connected sensors have benefits that extend far beyond convenience – namely, the ability to spot and mitigate problems before they turn into insurance claims.
How It Works
Property sensors like Notion’s are able to detect water leaks, opening doors and windows, sounding smoke and carbon monoxide alarms and temperature changes. Small and easy to install, they can be placed throughout a property.
The sensors connect to a property’s Wi-Fi system and can be monitored via the Notion smartphone app. Users set their own parameters for alerts, which are sent via push notification. On average, users engage with Notion seven to 10 times per day. For example, a parent at work might open Notion’s notification at 3:00, checking to make sure that the front door opened, indicating that their child’s bus got them home in time.
Users also have the option to add-on NotionPRO, a 24/7 professional monitoring service. If a user doesn’t respond to a triggered alarm, it gets escalated to a certified dispatcher who follows up and ultimately sends emergency services to check on the home. This ensures that alarms get addressed without requiring a property owner to be tied to their app around the clock.
In the case of smoke or carbon monoxide alarms or an opened window – which could suggest a break-in – these notifications are vital. A fire or burglary can’t always be detected early enough to prevent damages, but a faster response nonetheless increases the chance that more property can be spared.
Notion continues to focus on de-risking a property and empowering property owners to protect their people, spaces, and most valued possessions.
Most property owners tend to be reactive about maintenance, waiting for something to break before investing to fix it, which ends up being a more costly approach. Connected technology and constant monitoring transfers some power back into the hands of the property owner by providing a clearer picture of what’s going on in the home and allowing them to make more informed decisions. Ultimately, the goal is to enable more proactive maintenance, the avoidance of big losses, and extended peace of mind.
Managing Risks Proactively and in Real Time
When it comes to property losses, incidents like burst pipes, leaks and fire don’t care whether a structure is residential or commercial. Small business owners face the same exposures as homeowner and likewise can benefit from a detect-and-prevent approach that minimizes losses, and the expenses associated with them.
A sensor placed near plumbing in the basement, for example, can alert the owner of a mom-and-pop retail shop of freezing temperatures, which can help them decrease the likelihood of a burst pipe. Taking action to warm up that area drastically reduces the risk of future water damage, the need for plumbing repair, and possible business interruption.
According to the Insurance Information Institute (III), about 30% of all home insurance losses in 2016 were due to water damage and freezing. The average water damage claim costs about $10,000. A connected sensor system designed for small facilities generally runs no more than $200.
Especially with winter right around the corner, the ROI is indisputable.
The Insurance Benefits
Proactive maintenance and faster response to emergent issues in turn improve an insured’s risk profile. A history of minimal or no losses always looks good when policy renewals roll around, and can help small businesses avoid premium increases.
Homeowners who use Notion have had ZERO water damage insurance claims. Notion has helped reduce property damage insurance claims for insurance carriers by more than $1 million in the last year alone – and that’s just damage caused by water leaks.
Importantly, these systems are generally low-cost and easy to use. Notion’s starter kits of three or five sensors, a bridge that links the system to a property’s Wi-Fi, and a smartphone app runs just $150 to $200. The initial investment is well worth the avoidance of a loss averaging thousands of dollars.
Through partnerships with both personal and commercial insurers, Notion is bringing its multifunctional sensors to small business owners. In most cases, insurers will subsidize the cost or offer a policy discount for the monitoring system and the additional NotionPRO professional monitoring service.
The data collected via the system can provide underwriters a better understanding of an insured’s exposure and the extent of their risk mitigation efforts. Just like auto insurers are able to track insureds’ driving behavior and provide financial incentives for “safe drivers,” property insurers will be better able to differentiate levels of risk based on the feedback provided by sensor technology. To start, it could be as simple as identifying if a system is “on” or “off”, validating a “smart home” discount.
Equally interested in avoiding losses, insurers are increasingly the conduit between consumers and the latest technology. XL Innovate’s investments in and partnerships with insurtech companies like Notion have helped AXA XL not only stay up-to-date on new solutions, but also to connect clients to applicable and scalable tools.
For insurance providers today, having an IoT strategy is not just nice to have – it’s an absolute necessity. The benefits of this technology are clear, and the demand from commercial entities will only increase. Carriers that don’t have access to it will be left behind.