Consumer research study addresses impact of smart home devices and incentives on insurance choice

New consumer research from Parks Associates finds only 38% of insurance customers feel rewarded for their loyalty, while 36% feel their loyalty to their insurance company goes unrewarded. The research firm announced its findings from a new study, Transforming Home Insurance and Creating Consumer Value, showing that loyalty rewards, including new products, can drive some consumers to switch providers. Nearly 40% of consumers reported they will switch insurance providers if another provider offers smart home products that their current provider does not.

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“Devices offered for free drive higher levels of switching, but even the opportunity to purchase devices or receive incentives will drive some switching behavior among insurance customers,” said Chris O’Dell, Research Analyst, Parks Associates. “Currently 17% of insured homeowners own at least one anti-theft device, outside of a security system, and only 12% of insured renters own at least one security device. Security devices, especially video-enabled devices, can attract strong interest among customers.”

Transforming Home Insurance and Creating Consumer Value provides consumer preferences for IoT devices with benefits for personal lines of insurance, such as auto and home. Topics include device adoption and purchase intention, purchase drivers and barriers, preferred channels, appeal of alternative sources and pricing models, impact of prior claims experience, incentives, platform and app preferences, attitudes toward data sharing, and appeal of adjacent home services.

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“Almost 40% of insured homeowners and renters are likely to purchase at least one smart product with detection/prevention features in the next year,” O’Dell said. “Insurers have an opportunity to build up goodwill by offering value-added services, enabled by smart home devices, in addition to loyalty discounts. Smart products have the potential to mitigate risk for both the homeowner and the insurer, helping to prevent catastrophic damage from fire, flood, and more.”

Additional findings:

• 58% of consumers expect an insurance discount and 54% expect product discounts in return for buying smart home products from their insurance company.
• 19% of all insured homeowners have had an experience with a water leak, though only 15% of high purchase intenders for smart fire/water devices have experienced a leak.

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