Insurance, the Smart Home, and the Business of Keeping Customers Engaged

How insurance (insurtech) and other industries are keeping customers engaged through smart-home technologies, remote IoT services, product warranties and client communications.


The one-time boring insurance business is teaching the smart-home industry a thing or two about keeping clients engaged through IoT … and paying for recurring services. The hashtag #insurtech is kind of a big deal these days.

More than three years ago, I wrote an editorial called, “A Failure to Communicate: How to Lose a Client.” I noted how independent security dealers were losing customers to ADT, Comcast and other mass marketers because long-time clients didn’t know their “security guy” could also automate lights, cameras and door locks.

In our industry, the problem of maintaining customer loyalty — and therefore repeat business and recurring revenue — is only getting worse. TV commercials, Internet ads, online stores, big-box retailers, mobile carriers, ISPs and cable providers all beckon consumers to buy smart-home products and services from them.

Lennar's surprise decision to use Amazon Smart Home Services for home automation is just the latest salvo.

How can the little guy compete? The answer: Engage with your clients.

Keeping Clients through Engagement

It takes a lot of time and money to acquire a customer, so once you have them, you better keep them. How can you do that if you only talk to them when they have a problem?

Consumer engagement was a big topic of discussion at the recent Connections Conference, the annual IoT event produced by Parks Associates. The topic has always been a “thing” to the security industry, where subscription renewals are paramount and companies attach home-automation devices to engender “stickier” customers.

Smart Home panel discussion at Parks Associates' Connections 2017.

But now everyone wants to use smart-home technology to keep consumers engaged – from cable companies like Comcast to mobile providers like Verizon Wireless. The latter recently launched SmartHub, a device that uses 4G LTE cellular service for broadband, charging $40 per month for 4GB of data or $110 for unlimited.

There’s a smart-home component to SmartHub, but it’s extremely modest. Yet Verizon markets the heck out of it, assuming people will seek the wireless service because of its bells and whistles, rather than its primary task, which is to provide always-connected broadband.

Verizon is probably thinking: Broadband service isn't memorable. Consumers will switch when the next deal comes along. Smart-home services, however, could keep broadband customers hooked for a long time.

The Insurance Industry

The latest group to tackle user engagement is the insurance industry, scrambling to maintain customers in a commoditized marketplace where there’s virtually no communication until renewal time, unless the client has a claim.

Satisfied customers are not necessarily loyal customers. According to IPSOS, 60% of defecting customers are likely to describe themselves as “satisfied.”

In a just-released report about auto insurance, J.D. Power names “communication” as “the key performance indicator [KPI] that has the greatest influence on customer satisfaction.”

Satisfied customers are more likely to stick with their provider — insurance or otherwise.

Even so, “satisfied” customers are not necessarily loyal customers. An IPSOS survey (pdf) published earlier this year found that 60 percent of defecting customers are likely to describe themselves as “satisfied.”

These satisfied customers will still jump ship when the next provider comes along with a better deal or a shinier toy. When that happens, they may not remember your name or even that you, too, sell that shiny toy.

Insurtech: Communication Begets Loyalty

Communication must be ongoing, according to insurance execs speaking at Connections.

Today, insurance is “fully transactional based,” says Aleem Lakhani, executive vice president of AmTrust, a financial holding company providing insurance and warranty solutions. “It’s a great model if the premise is being excellent at the time of need only.”

Now, however, with the “empowerment of consumers, that model is no longer sustainable,” he says.

Instead of reacting to circumstances, Lakhani asserts, the insurance industry must “redesign ourselves for this marketplace – to “start from pre-purchase to end-of-life experience.”

One way to do this is through smart devices and their apps. In Canada, insurance giant Desjardins is giving Roost leak detectors to each policyholder, free of charge.

By merely downloading the app, the customer is engaging with the insurance company like never before, forming a “tangible relationship” with the provider, says CMO David Henry: “Hey look, my insurance agency gave me something.”

“There’s an aha moment by the customer — when it’s a cold morning and we tell them their boiler is broken, but we’ve got an engineer and he’ll be there in an hour.”

— D’Arcy Rossiter, Centrica,
on remote diagnostics for
British Gas customers

In the same vein, British Gas parent Centrica wasn’t “working the British Gas channel as well as we could,” said D’Arcy Rossiter of Centrica Connected Home.

Last year, the organization launched Boiler IQ, a connected device that provides remote diagnostics and management for boilers. The provider charges £3 per month on top of its standard service for the privilege of having British Gas detect faults up to 24 hours before the customer does … and dispatching a technician the same day with the right parts on hand.

“There’s an aha moment by the customer,” Rossiter says, “when it’s a cold morning and we tell them their boiler is broken, but we’ve got an engineer and he’ll be there in an hour.”

Back in the insurance industry, AmTrust’s Lakhani pointed to another IPSOS study that I still have trouble believing: Consumers who purchase service contracts for electronics are significantly more satisfied with their covered products than consumers who do not purchase warranties.

In the case of mobile phones, 48 percent of covered customers said they were “extremely satisfied” with their products compared to 27 percent of non-covered buyers. For dishwashers, the spread is 73 percent to 21 percent.

What does this tell us? Consumers want that connection with their vendors, and they’re willing to pay for it. There’s a comfort level knowing that your provider has your back … or your boiler or your leaky faucet.

What are you doing to make that connection on an ongoing basis?