Insuring Connected Homes - An Evolving Reality

Insuring Connected Homes - An Evolving Reality

- Srivathsan Karanai Margan

Innovation is the only insurance against irrelevance

- Gary Hamel, Business Thinker.

Introduction: The home insurance sector in India has achieved less than 1% penetration level against a global benchmark of more than 95%, which by any measure is not an impressive number to speak about. Various reasons such as, not being mandatory, lack of thrust by insurers and intermediaries, and the latent fatalism of the Indian populace could be attributed for this pitiable statistic.

In comparison, the penetration levels in mature economies such as France (99%), UK (97%), and US (96%) is a picture of envy. While it is easy to brush aside these numbers with casual remarks that home insurance is mandated in those countries and the frequency and severity of the risks encountered are more in those regions.

Notwithstanding the excuses, the number and impact of the natural catastrophes that have struck the Indian subcontinent in the past few years convey a different message. Frequent cyclones, heavy monsoonal rains, and floods have proven to be calamitous, crippling all activities and inflicting monumental losses. It is expected that the Indian market wakes up to reality and witnesses an increased thrust by insurers and intermediaries for promoting home insurance products, and customers get rid of their reluctance to purchase home insurance.

While Indian market is yet to realise the benefits of home insurance and purchase it even for remediating a loss from a covered event, mature economies are moving ahead to reinvent the business models and alter the purpose of insurance to prevention and protection. The growth of internet-of-things (IOT), which is the interconnection of computing devices embedded in everyday objects, enabling them to send and receive data is extensively expanding its scope to home security, automation and energy management.