According to several estimates, there are already 7Bn IoT devices installed in homes around the world. That number is expected to keep growing strongly into the future.
Insurance carriers have embraced this wave of technology in the home. Some are using data from policyholders' devices to improve underwriting or support claims processing. The most advanced insurers are offering policyholders lower premiums for having these devices installed in their homes.
However, smart home devices need to connect seamlessly to one another and are typically the weakest node in a network as a result. IoT cybersecurity breaches are becoming more frequent.
This poses a challenge for insurance companies who are reliant on these devices for pricing and claims decisions. A hacked device could lead to an incorrect payout or premium increase.
Insurance companies therefore have an interest in helping their policyholders secure their devices. Underwriters and claims teams will have to look past their spreadsheets to focus on network security.
Property and casualty insurers that encourage smart device use play an important role in influencing how customers use their devices. While this relationship can be beneficial for both insurers and customers, insurers that enter it face further privacy and security complications.