Are customers ready for smart home technology? Today, 2 out of 3 U.S. homeowners insurance customers would be willing to change insurance companies to get policy discounts for using smart home devices, including smart thermostats, smoke/carbon monoxide detectors and garage door openers. NTT DATA's national research study uncovers consumers' interests in using smart home devices and their concerns around sharing data from those devices with insurance companies.

1. © 2016 NTT DATA, Inc.1
IoT: Disruption and
Opportunity in the
Insurance Industry
Normand Lepine | January 2017

2. © 2016 NTT DATA, Inc.2
Key Questions: Investigating Insurance IoT
1 2 3Are consumers ready
for Smart Home
technology?
Are consumers ready
to share data to
reduce risk and
save money?
4 5
Are Carriers ready for
Smart Home
initiatives?
What are the barriers
moving forward?
What are the threats
and opportunities for
the industry?

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Survey snapshot
HOUSEHOLD INCOME AGE DISTRIBUTION
12%
28%
46%
14% Less than $49,999
$50,000 to $99,999
$100,000 to $199,999
$200,000 or more
35%
33%
32%
18-34 35-54
Over 55
Overall mix of respondents reflects a
higher income base
Even distribution of respondents
across age segments
CARRIER INTERVIEW SUMMARY
101 surveys were conducted to understand investments, opportunities, challenges and
perceptions for Smart Home programs
40%
24%
36%
© 2016 NTT DATA, Inc.3
Top 10 P&C Firms
P&C Firms Ranked Below Top 10
Other (Not indicated, prefer not to disclose)
Consumer:
• 1,006 consumer survey responses
• Online survey
• U.S.-based
• Reflect higher income
• Required to be 18+
Carrier:
• 101 carrier surveys conducted with
executives involved in decision-
making, budgeting, strategy or
execution
• Director-level employees and above
• Distributed between regional and
national firms

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59% of Carriers have made strong progress with
leveraging Smart Home technology to improve products.
There is a large distinct group of consumers who are
willing to invest in Smart Home technology; however, they
are less loyal to their current Carrier.
Consumers want their insurance company to be advisors.
The majority of consumers find the Smart Home to be
expensive and a challenge.
Carriers recognize the importance of IoT to
improve their business.
Findings
© 2016 NTT DATA, Inc.4

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Study Definition of
Smart · Home · Devices
© 2016 NTT DATA, Inc.5
We are interested in understanding your views and interest to invest
in “connected home” or “Smart Home” technology. The Smart Home
includes devices that have networked connectivity, allowing them to
send and receive data. Categories include:
Security Systems Smoke/CO Detection Frozen Pipe Sensors
Doorbells Cameras Lights
Vendor Examples:

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Top Five
Smart Home Devices
1 Thermostats
2 Smoke/CO Alarms
3 Garage Door Openers
4 Door Locks
5 Door Bells
of survey respondents expect
to purchase Smart Home
devices in the future
50%
Millennials are becoming
the dominant purchaser of
Smart Home devices.
The interest in purchasing
cameras is growing
considerably.

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There are trade-offs with the
consumer decision to engage…
CONS
Safety
How does IoT fit into the insurance value proposition?
Cost savings
Convenience
Avoid liability
PROS
Opportunities for
value-added services
Privacy and security
of data
Expensive
Complicated and
difficult to implement
Increased interaction
with carrier

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Seekers
64% of Survey
• Policies are static and inflexible
• Feel Carriers don't see them as
unique customers
• Carriers could provide more
personalized services
• Would consider leaving Carrier
to save money
Keepers
36% of Survey
• Like the structure of policies the
way it is
• Feel protected by their
current policy
• Current policy does a good job of
tailoring their policy
Switched Carriers with current home
Will change Carrier if not innovative
Want Carrier to anticipate needs
22%
26%
59%
35%
46%
71%
Keepers are generally
content while Seekers
want more
Homeowner
insurance
customers are
segmented into
two distinct
groups

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Older
Twice as many respondents in the 45-64 age range
Technology Laggards
Twice the percentage of late adopters
Satisfied with Policy
35% of respondents rated their satisfaction with their policy a 10 vs 23%
for other respondents
Value Relationships
More likely to choose a policy because of a relationship with a broker
Value Service
Reputation for service is more important in selection, but Keepers are
more likely to switch Carriers due to a service problem
If It Works, Don’t Fix It
If satisfied, prefer not to make changes
Keepers
struggle with technology and
focus on relationships
Keepers are less likely to change Carriers
and prefer the status quo
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Seekers are
younger and always looking
for improvement
Seekers are less loyal to their Carrier and
willing to make changes to make a policy
more customized
Younger
Includes 72% of overall respondents in the 25-34 age group
Technology Savvy
77% are early adopters
Moderate Satisfaction with Policy
77% rated satisfaction 7 or lower (out of 10)
Value Cost-savings
73% of seekers want to know the cost savings in order to consider Carrier
Smart Home programs
Value Personalized Offerings
81% of respondents would value a more personalized policy from their Carrier
Always Try To make It Better
Significantly higher percentage of respondents always want to make their
policy better
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Seekers
are more willing
to share data
Keeper
% Responded 8-10
Device Seeker
% Responded 8-10
Security Systems
Smoke/CO Detectors
Frozen Pipe Sensors
Doorbells
Cameras
Thermostats 28%
30%
37%
32%
25%
18%
47%
41%
59%
54%
40%
24%
But it depends
on how personal
the data is
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Privacy and security for Smart Home devices
remain a major concern
Trust in the future ecosystem for Smart Home data will
be critical for future initiatives
56% 60%38%
Are very hesitant to share
data/information with vendors,
insurance companies and other
interested parties
Are very concerned about privacy Are very concerned about the
security of information

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The opportunity for
Smart Home programs
are interested in
understanding the
potential savings52%
believe that any investment
that will reduce premiums is
a good idea
26%
state that it sounds great and
to sign them up!22%
• Cost savings
through discounts
• Proactive services
to protect dwellings
and minimize
liability
• Customized
homeowners
policies
• Programs to
facilitate Smart
Home installation
Seekers are ready for Smart Home programs
from Carriers
… but are looking for the benefit
Cost savings through discounts
Proactive services to protect
dwellings and minimize liability
Customized homeowners policies
Programs to facilitate Smart Home
installation

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believe IoT will have an important
influence on products
and services
74%
77%of Carriers are
ramping up IoT
initiatives
see the opportunity to attract
new customers83%
believe IoT will improve customer
relationships87%
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1 2 3 4 5
Customer
Service
Customer
service and
technology
are the top
initiatives for
Carriers
Initiatives are
focused in targeted
areas across the
organization
RANKING OF INITIATIVES
Customer
Service
Technology
Partnerships
and
Alliances
Sales/
Distribution
Underwriting
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Carrier
executives see
technology firms
as the top players
Potential partners
could be disruptors
COMPANIES BEST POSITIONED FOR THE SMART HOME
62%
48% 44% 40%
28%
12% 11%
SEGMENTS BEST POSITIONED FOR THE SMART HOME
72%
50%
39% 37%
25% 19%
Major
technology
firms
(Google, Apple,
Samsung)
Home
appliance
manufacturers
Telecommuni-
cation firms
Insuretech
companies
Insurers Utilities/Cable
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53% of
Seekers
Seekers are both
an opportunity
and a risk
would consider an
alternative provider
(non-traditional) for
insurance coverage
TRUST SHARING SMART
HOME DATA
Company or type of
company
Answered
4 or 5
City services 51%
Your insurance company 48%
Apple 46%
Primary bank 42%
Amazon 40%
Google 40%
GE 31%
Another insurance
company
30%
Utility provider 29%
Samsung 29%
Lowe's 26%
CONSIDER AS AN
ALTERNATIVE INSURANCE
PROVIDER
Company or type of
company
Answered
4 or 5
Primary bank 41%
ADT 39%
Apple 33%
Google 31%
Amazon 28%
GE 22%
Samsung 21%
Cable 17%
Walmart 11%

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Resolve the
data issues
• Develop an ethics
policy for IoT
• Provide transparency
on data security and
privacy
• Address the data and
analytics infrastructure
Align IoT
objectives
• Understand consumer
goals first
• Plan initiatives to
converge Carrier and
consumer desires
• Get internal agreement
among business and IT
stakeholders
Focus on
value-add
services
• High priority for
consumers
• Offer advice and
assistance with Smart
Home value
• Use services to create
strong loyalty and new
revenue streams
Partner
• Carriers can’t manage
the ecosystem alone
• Potential disruptors can
become allies
• Cost-sharing
arrangements may be
highly beneficial
Recommendations
Safety, security and loss mitigation are
still what insurance offers and what
consumers and IoT players want

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