I consider myself a veteran of the IoT and, in particular, the Smart Home space having built start-ups and worked to deploy connected products and services through major corporates such as BT, KPN, IAG, Bell, D-Link, Lowe’s Home Improvement, and others. I remain excited about the benefits of the IoT and connected devices; everything in our home will become IP addressable because it will make our homes safer, more energy efficient, and easier to manage.
I recently attended an InsureTech event in London to see what the industry is doing in the Smart home and IoT space as Amazon announces its’ first big move into insurance with Travellers in the US.
The Smart Home is growing fast, and the forecasts mean the insurance industry cannot ignore the opportunity, but it is a challenging market. Technology was an early barrier with multiple standards and complexity hampering adoption. When the technology started to mature, business models became the problem with too many providers trying to drive their own commercial agendas. Finally, it did not fit comfortably into the traditional industry models so there was no obvious consumer route to market.
We are now past many of these challenges and various channels are starting to slug it out to see who can stake a claim to be the consumers supplier of choice. To date, service providers, retailers, and security companies have set the pace, each driven by the benefit of using data from connected devices to deliver new, value-added services over the top of their core offerings. Amazon has steamed into the market with Alexa and shown how voice will be a key enabler and Google is now chasing hard; like Samsung, they each recognise that the smart home is going to be the key for consumer loyalty, (https://www.marketingweek.com/2018/10/12/samsung-smart-homes-gamechanger-for-loyalty/ ).
But who will eventually become the trusted supplier of smart home products and services?
I still favour the big telcos and service providers but when this market started to develop I had a small bet on utilities taking the lead given with the huge investments in smart grid and their stated ambition to stretch beyond the meter into the home. I’m glad it was a small bet.
Smart Grid investment attracted a huge wave of new start-ups but those that focused on consumers starved to death as utilities ran long, inconclusive pilots and focused on production and infrastructure. Investment in Smart Grid has made utilities more efficient within their core business but, with the exception of British Gas and Hive, most remain simple commodity suppliers.
To show I am a sucker for punishment, a couple of years ago I put a quiet bet on insurance companies racing to the fore in this market. However, as I sat in on presentations the InsureTech Europe conference this week, I fear that bet is lost. Like utilities, they are going to miss out on what is a huge growth opportunity and the news that Amazon has made its first move doesn’t really seem to have created any real buzz.
I was convinced by my logical analysis of the market. The insurance industry’s historic recognition on the value of data, their strong relationship with the consumer and their homes, and the potential benefits to their core business, all led me to a false sense of security. I recognised they lack the core competencies to expand into the market but thought that, like other channels, they would forge strategic partnerships to execute.
I now sense that most InsurTech investments are inwardly focused on incremental improvements to core business processes which, I recognise, has a consumer benefit but it’s not really going to shift the needle on the fortunes of the industry. It seems that the smart home opportunity may be slipping away because, like utilities, they are inward looking and don’t have innovation in their core DNA.
The strength of Amazon has been its success innovating. Jeff Bezos started selling books from a garage but proved exceptionally good at recognising opportunities, hiring the right talent, organising to execute, and committing the investment needed to succeed. I suspect this is where most insurers are falling down with their own plans.