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Consumer IoT platform Pepper and Comcast’s insurance tech unit Notion have combined, the companies announced, declining to name the financial terms. The joint effort will offer insurance companies IoT and smart home integration solutions.
“We believe connected insurance tech is the next frontier of innovation in consumer IoT,” said Scott Ford, CEO of Pepper. “Combining Notion’s leading smart property monitoring sensor system with Pepper’s full-featured platform and service offerings will provide insurance carriers a customized suite of connected solutions through a seamless white-label approach.”
IoT and insurance: What is insurtech?
In essence, insurtech with IoT enables insurance carriers to monitor homes and businesses for signs of possible damage, including water leaks, fire, carbon monoxide, mold, open doors and windows, drastic temperature changes and other possible threats.
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Pepper is a consumer IoT platform for businesses which seek to build, deliver and monetize secure connected devices and services. Current customers include consumer IoT brands, manufacturers, distributors, retailers and service providers.
Notion makes smart property monitoring sensor systems that enable small business owners or homeowners to monitor property from an app.
From there, the insurance company can lean on the data from those IoT sensors to reduce the frequency and dollar amount of insurance claims. Pepper and Notion claim home- and small business owners can save up to 20% on insurance by preventing possible problems before they happen. This is all part of a shift from a “repair and replace” business model to a “protect and prevent” approach, Pepper and Notion said.
Spherical Insights & Consulting predicts that the global insurtech market will grow to $167 billion by 2023. They also expect the U.S. consumer IoT services market to reach $25 billion by 2025.
Who owns insurtech data?
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In terms of the technology and who owns the data, Pepper says the carrier and its customers will own and control all data. For insurance companies, that opens new avenues to underwriting, claims reduction and new value-added services. These might include additional insurance products with revenue streams, such as through a variety of connected home premium services.
Insurtech can also include capabilities such as AI that handle how customers get price quotes, chatbots for simpler questions and more emphasis on mobile. It can also be used to make it easier and faster for customers to sign up for plans, a big deal when digital natives confront an industry known for its love of slow paperwork. Some customers, like Salesforce partner AAA Carolinas, saw a 330% increase in member engagement when they consolidated customer data and added a chatbot.
Statistics and challenges
A key factor here is that insurtech is designed to save insurance companies money, not to make households and businesses safer or to revolutionize the way insurance companies communicate with those same individuals. It’s about pricing the various ways in which insurance companies charge for their services and pay out.
There is some crossover here with fintech, which focuses on increasing efficiency and the industry and also runs into the blurry line between financial experimentation outside regulatory lines. Like fintech, insurtech seems to be shifting toward a focus on partnerships rather than directly challenging traditional methods. While some aspects of McKinsey’s prediction seem old-fashioned now, the general development of the industry is comparable.
McKinsey also points out that the insurtech industry is cooling a bit in 2022. Their findings show that valuations of existing insurtech companies have fallen compared to their all-time highs. Inflation, rising interest rates, and geopolitical and macroeconomic uncertainty are giving investors pause in this as in other industries, McKinsey said.
However, today’s rising interest rates and hard markets are good for insurance companies. Investment in insurtech attracted $5.3 billion in Q4 2021. Salesforce notes that the insurance industry is “surprising some who viewed the industry as slow to change.”
Analyzing the competitors
Pepper and Notion face some healthy competitors, including Oscar Health, Lemonade, Bright Health, Clover Health and Shift Technology. Oscar offers a data-driven health plan infrastructure stack through the +Oscar platform for healthcare providers. Lemonade offers an app for health care data which could easily fit insurance into its ecosystem. However, two of these competitors, Bright Health and Oscar Health, have both faced dramatic reductions in scope recently.
Meanwhile, Pepper sets itself apart with its full-stack, full service IoT offerings. The combination with Notion reflects another interesting shuffling as the insurtech industry reacts to the changing ways in which technology services are used and sold.
“Partnering with a trusted, next-generation consumer IoT platform like Pepper aligns perfectly with Notion’s mission to deliver innovative, smart insurance and home security offerings,” said Thomas Fad, vice president and general manager of Notion.
Elsewhere in the insurance industry, car insurance is getting a taste of artificial intelligence. UnitedHealthcare uses predictive analytics to spot “social determinants of health needs.” However, all of this tech means cyberattacks are on the rise, which comes with its own cybersecurity insurance.