How IoT Will Transform Insurance from Reactive to Proactive

As it stands today, insurance is a service that’s reactive to home damage events. In the current model, homeowners or businesses select a policy, and then loss prevention is entirely in their hands with little-to-no involvement from their provider.

But this hands-off insurance approach is poised to change, moving towards reactive protection and loss prevention. Insurance can offer homeowners a better experience, and IoT technology is just starting this transformation.

Adoption and growth of the Internet of Things industry is moving forward, as it’s is expected to hit $155 billion by 2023, according to a recent report from Strategy Analytics. This technology is transforming how people interact with their homes, for example, by controlling their lights with a voice command or smartphone app instead of with the light switch. Sensors specifically can play a part in home awareness for home damage prevention by giving homeowners data on the condition of their home and the ability to act proactively.

Technologies that support these systems, like faster networks and 5G, are advancing and will continue to facilitate home technology adoption and the number of homeowners who want to manage their home. IDC’s latest industry forecast found that security is the second-most reason for smart home device adoption, which will remain for the next few years. These and other sensing devices provide the ability to “see” a home’s temperature, water, smoke, or access/entry conditions, which will lead into the next phase of change that’s about to hit the insurance industry.

With smart home technology in place, creating data that can be analyzed and sent via notification can give the homeowner the power to act. For example, a pinhole leak in the washing machine water hose could fester and lead to ruined floors, mold, and more, until a bigger problem emerges; or a hot water tank could burst and leak water for hours before the working homeowner gets home and can intervene. A smart water detector could alert the homeowner of an incident, mitigating damage and making the difference between major, minor, or no damage, and thus, no insurance claim at all.

For example, Guardian can integrate whole arrays of sensors and flow meters into a single wireless network to provide a full-circle digital view of water circulation throughout a home and alert homeowners of leaks via mobile apps. Aside from water protection, there are other IoT devices designed to help with heating equipment, such as RemoteLync, which provides remote control of furnaces, thermostats, and more via an app. Other companies provide heat sensors which can alert homeowners when air temperature passes a safe level, and there are also smart smoke and carbon monoxide detectors. Homeowners can choose devices to protect their home based on their lifestyle and where they live, where a home in a warmer climate may need more temperature sensors, and a home in a swampy area may need more water detection.

Faster notification of hazards – especially when the homeowner is away – allows faster response time and lesser damage. This process has the power to affect the current reactive insurance model, where this incitement to act translates into lesser damages and fewer claims – for which insurers can work to reward their customers. The insurance industry can embrace this technology and support homeowners in protecting their property by offering smart home device packages or discounts to those with technology already in place. A new cooperation can shift insurer’s focus from reactive to proactive, with the opportunity for them to become a better partner for their homeowner and even renter customers.

Convergence of IoT technology with insurance is advantageous for both insurers and homeowners by changing their communication from unfortunate occurrences to proactive home management. Moving to a proactive model with IoT technology is the beginning of insurance disruption, and SmartInsure is thrilled to be a part of it. Learn more about us at