Googles Moving In
Insurance Experts' Forum, January 14, 2014
Google has agreed to buy Nest, creator of “smart” thermostats and smoke alarms, for $3.2 billion in cash. And while the word “insurance” doesn’t appear anywhere in the press release, or in any of the other versions of this story I’ve read this morning, “the internet of things,” which is one of INN’s Top 5 Trends for 2014, does. And, the potential applications for P&C insurers are many, if not immediately apparent.
The Nest devices use sensors and Wi-Fi connectivity to learn individual household habits and manage the heating and cooling of homes. Connectivity enables the company to learn the habits of all users, which could be aggregated and used in any number of ways beyond heating and cooling, including conservation or sales and marketing of energy and energy-related products.
That combination of real-time data collection from remote sources, wireless connectivity and analytics could affect virtually every aspect of insurance.
In October, the company expanded into smoke and CO2 alarms with Nest Protect. The device includes a photoelectric smoke sensor, CO sensor, heat sensor, light sensor, ultrasonic sensors and activity sensor. Together, they analyze smoke and CO levels, Nest says, and can its LED lights can light your path through the house. Like the thermostat, the smoke and CO2 alarms are wirelessly interconnected. Homes that have both the Nest Learning Thermostat and Nest Protect, a free Nest user account allows the products to work together. If Nest Protect’s carbon monoxide alarm goes off, your Nest thermostat automatically turns off your gas furnace, a possible source of poisonous carbon monoxide leaks.
Home security devices are likely not far behind for the company, which professes to reinvent “unloved but important home products.” And partnerships between home alarm companies and homeowners’ insurers are increasingly common. Access to the sensors inside a home could offer a wealth of data, and vastly improve and increase the number of opportunities for risk mitigation.
As Mark Breading, a partner at insurance research and consulting firm Strategy Meets Action, said in a previous interview on internet of things: "You get a better view of the real-time risks. It's not just that you understand the risks better and give them a better price. You can understand that the furnace has blown out and the pipes are starting to freeze, for example. And you can take action against that."
Chris McMahon is a senior editor for Insurance Networking News.
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