By Robert Marshall | CEO, Whisker Labs | Global leader in fire prevention and grid monitoring

Devices are not a strategy. Done right, however, the customer experience transformation, preventive benefits, and telematics data will supercharge your strategy.

The Landscape Continues to Change

The recent announcement of State Farm’s investment in ADT has renewed strategic urgency for the insurance industry, highlighting key questions for leaders in the space. For instance, how do you incorporate smart home technology, transform customer engagement, and reduce time and distance to ‘predict and prevent’? The vision is powerful and articulated by many, but with few successes to date. How can you enable your organization to move more quickly toward this heading? And more broadly, what will best serve as your ‘foundational’ move to establish a solid footing for a measured yet forward-looking home telematics program? From distributing a quarter of a million Ting devices and subsequently preventing 10 potential fires every day, we’ve witnessed that the future of ‘predict and prevent’ is here – and achievable.

The IoT Pilot Hangover

At Whisker Labs, our sole focus is protecting homeowners and their families by preventing fires, which requires us to be experts at identifying the ‘signal in the noise’. Drawing on this analogy, I’ve noticed that prior investments in IoT pilots and evaluations – a large majority of which fell short of expectations – have created ‘noise’ for insurers in deciding important next steps. However, much has changed since then, as I’ll outline below, and we’re well past the disillusionment phase of the hype cycle. So it warrants a second look if you’re not already pursuing that.

What We’ve Learned

Getting to ‘predict and prevent’ is a marathon, not a sprint. Providing smart and simple-to-use IoT devices and services is a key strategy along that journey. Helping protect policyholder families and homes with preventive technology is a no-brainer on paper. Still, whatever the offer, it must be easy. It has to offer compelling value for the homeowner. And it must be aligned with where you envision your business going – operationally, financially, and strategically. So again, it is not about the device and the technology; it is about the transformational experience you’ll bring to your customers – it is about serving and protecting their families and homes. All the while avoiding terrible loss events that are horrible experiences for all involved.

A well-designed smart home IoT and telematics program recognizes the need to engage customers differently, meaning not everything you’re used to will work. On top of this, you must be fully prepared to challenge your organizational data maturity in breadth and depth. Here are other insights to help with your journey towards ‘predict and prevent’.

A well-designed smart home IoT and telematics program recognizes the need to engage customers differently.

Reframe the challenge. IoT pilots of the past had theories on ‘lift’, but were disconnected from the rest of the organization. Linking the goodness of a smart home customer engagement model is key to unlocking other opportunities for your ‘predict and prevent’ business case to serve other initiatives such as digitization, acquisition, retention, subrogation, and claims data innovation.

Flex your data muscles. If you’re like most organizations collecting more and more data can be a challenge – but should also be a solution. For instance, fire incident data in the U.S. and insurance fire claims data share one thing in common: unfortunately, it could be much better (how many of your fire claims have an ‘unknown cause’?). While this example is specific to our offering, Ting, it holds for any claim category. Your business case needs defensible data, but that’s not always readily available. Be ready to validate assumptions, identify what you can’t know, and fill in gaps or interpolate based on other trusted data sets – including those from your IoT technology partner. Importantly, please don’t shy away from holding your partner and their solution to a minimum standard of providing novel (read: the kind that can unlock new insights) data. Your partner should also help you improve data quality and maturity in other business areas, such as claims data, pricing, underwriting, process innovation, digital marketing performance, and new product introduction.

Adapt your ROI. Your model needs to stretch beyond a year. Great preventive technology will ferret out issues that otherwise can lead to losses and claims for months and years beyond that current year. When standing up a new IoT safety program, relying on hard, short-term ROIs will sink your business case every time. A predict and prevent strategy requires a commitment to a transformational experience to help protect your customers, which includes offering it at no cost. There’s a lot more to it; similar to claims impacts and underwriting models, the timeline stretches well beyond a year. Remember, it’s not a sprint.

Great preventive technology will ferret out issues that otherwise can lead to losses and claims for months and years beyond that current year.

Get aligned and stay there. There should be no misaligned interests in partnership and agreement structures with a technology partner – none. I can’t understate this. Without true alignment with your partner and within your organization, your program will face headwinds. Seek, establish, and maintain alignment on mission, business goals – and, most importantly – what is best for customers and how to craft and deliver the most valuable and lasting experiences. And make sure you select partner(s) that can lend and extend their expertise into your organization to help new data and operating capabilities take root.

Insist on key ‘must-haves’. Performance with simplicity – these are essential ingredients to the recipe. The data demonstrating the performance of the devices/services you offer must be real, not just from simulation or based on limited trials. In other words, the technology must come with real, unbiased, and statistically significant data. The good news is that if it does, there’s little need to ‘test’ or ‘pilot’ like the past failed attempts. But that’s not all – it must be simple for your customers. If it’s not easy, the rest of the equation won’t balance, and you’ll sputter out of the gate.

Embrace the change. All components that define a great smart home program must be thoughtfully integrated across your organization; some of these may likely lie outside your core competencies. This is where a strong partner is so important, ideally one that makes embracing the change easier. Such a partner will ensure the customer (and technology) lifecycle flourishes: policyholder marketing, participation agreement, enrollment, distribution, onboarding, support, and key technology performance metrics. In addition, partners must already possess API endpoints to enable automation and workflows around eligibility, customer moves, and data ingestion. Fortunately, these efforts will be accretive to your broader digitization efforts.

Lean on your partners. They’ll push you and your teams productively – if they’re the right type of partner. The right partner will bring best practices for marketing to your policyholders and lead the customer journey with the technology from the moment they click ‘yes’ in your app or on your web page to activation of the device/delivery of the service. They will ensure that customer experience meets or exceeds your brand standards. They’ll help you make sense of the data and how to amplify customer goodwill and claims avoidance stemming from the program.

Speed is your friend. Once your program gains momentum – speed to distribution is key. Your ROI will prove out with the right partners and approach. And I can’t stress this enough: it’s important not to try and ‘boil the ocean’ in one fell swoop. Focus is paramount, which means avoiding strategies that will dilute impact, such as bundling disparate devices and services in one offer or limiting targeting to small segments of customers. Program complexity is a recipe for failure. In the long term, your predict and prevent initiative can be broadened after success and many lessons learned.

To sum it up, be sure you embrace the full scope of the opportunity. If your partner has shown real impacts to claim avoidance, retention, and customer satisfaction, build on that instead of running an experiment. Refuse to allow noise or uncertainty in claims data to deter your momentum or skew your business case. Measure with rigor and manage by fact as you move along. Your data will never be better. Your partners in these programs must do the same and have the chops to help get you there.

Success is never guaranteed, but a strong tailwind from a partner with proven success can be just what you need to lean in and establish your ‘predict and prevent’ beachhead sooner than you thought possible. Most importantly, with proper focus execution on delivering a predict and prevent experience, you will forever enhance your relationship with your customers.