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From water shutoff valves to electrical surge protectors, technology is able to mitigate a wide variety of risks, saving carriers and policyholders valuable time and money. Internet of Things technology is also enabling insurers to be more proactive than reactive so they can prevent or at least mitigate some claims before they occur. Sarah Jacobs, senior vice president of Nationwide's Personal Lines Product and Underwriting, details how they are implementing technology and discusses their smart home programs.
Transcript
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Patti Harman (
Well, thank you very much for joining us for this Leader live session. I'm Patti Harman, editor in chief of Digital Insurance. So it's amazing how much home technology is changing and we have devices ranging from water shutoff valves to electrical surge projectors, and pretty much everything in between. This technology is able to mitigate a wide variety of risks, saving carriers and policy holders, valuable time and money. I OT technology is also enabling insurers to be more proactive than reactive so they can prevent or at least mitigate some claims before they occur. Joining me today is Sarah Jacobs, senior Vice President at Nationwide's Personal Lines product and underwriting, and she's joining me to explain how they are implementing technology and discuss their Smart Homes program. Sarah, thank you so much for joining us.
Sarah Jacobs (
Thank you for having me. Great to be here.
Patti Harman (
So there are many new kinds of I OT technology available today. Can we start with just a short overview of what this technology encompasses and how do you view I OT technology?
Sarah Jacobs (
Sure. So over the last 10 to 15 years, there really has been an explosion of iot devices, as you mentioned, that affect almost every aspect of our lives. And an iot device is simply any device that has technology embedded in it to sense and interact with its environment and connect to the internet. And really it just seems like everything is connected these days from your watch to your refrigerator. I read the other day, the estimates vary, but they think that there's 20 to 25 billion iot devices across the world today, and that's just going to continue to expand and we'll continue to see new use cases for them. Now from a personal lines insurance perspective, we've seen two primary applications for IOT devices. So the first is auto telematics, which is kind of old news at this point, but telematics uses IOT devices. So especially originally you think about those DONG goals that used to plug into the car or tags.
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Of course today we use a lot of smartphone technology to collect real-time driving data and this is used pretty broadly in the industry and allows us to understand and personalize rates based on actual driving behaviors. On the property side, the use of smart home devices has also grown exponentially in the last three to five years, and I think a lot of carriers are still fairly early in that journey of understanding how to respond. So there's a wide range of smart home devices as we've mentioned from doorbells to cameras and appliances, and certainly some of those have more application to insurance than others. So for example, we recently had a survey at Nationwide of homeowners and it showed that the most common smart home products owned are video doorbells for 63% of homeowners have them and 55% have a smart thermostat. And while those certainly provide some benefit, it's really devices like water shutoffs and electrical fire prevention devices that are actually more beneficial in addressing some of the more common or expensive types of home disasters. And we'll spend some more time talking about that today.
Patti Harman (
Yeah, I'm glad you mentioned about cars. I bought a new car about two months ago and I was amazed at how connected it was and the kinds of information that it could provide on a regular basis. So technology is changing in so many different areas. How is the use of iot technology changing how carriers and policy holders are able to manage different risks then?
Sarah Jacobs (
Yeah, so overall telematics can be a tool that can empower customers to take more control of their insurance premiums through their driving behaviors. And that's really been a big focus of Nationwide Smart Ride and Smart Miles programs. So for example, our Smart Ride program provides a discount based on safe driving and Smart miles varies your premium based on the number of miles that you're driving in addition to your driving habits. But I would say that our perspective even with telematics has evolved because we recognize that we could not only use it to monitor and price for driving behaviors, but we could actually use it to help coach and change driving habits and reduce distractions. So at a macro level, we ultimately hope to use telematics to influence safer roadways for everyone. And then on the property side, I think when we first launched our smart home program about seven years ago, we originally thought of it a little bit more like traditional auto telematics.
(
So we'll give you a discount to install this device in your home and then we'll use that data to understand and better price for the risk over time. And our perspective on that has also evolved a bit in that we see it more as an opportunity to provide our customers with peace of mind and to help mitigate damage in homes, especially with regards to water and fire. So really iot technology is helping us as we shift that customer mindset and really the insurance value proposition from a repair and replace mentality to a predict and prevent approach. And we just see tremendous opportunity in limiting both the frequency and the severity of preventable non weather related losses. Again, specifically around fire and fire and water. Sorry. And then from a customer perspective, you and I were talking about this a little bit before the call started. Dealing with a home incident is a very stressful and disruptive experience. Water leaks and fires of course can result in extensive home damage. Of course the safety concern with fires, not to mention that those repairs can be really, really lengthy and disruptive to homeowners. So that's the main reason that we encourage homeowners to leverage Smart Home tools as a means to prevent damage from ever happening or at least catch it early before it becomes a major event,
Patti Harman (
Really gives you another way to interact with your customers, which is really nice. From an educational standpoint, what do you look for when you're assessing these different types of technologies to recommend or share with your policy holders then?
Sarah Jacobs (
Sure. So there's a few things that we look for as we lean into these solutions that help predict and prevent damage for our members. And obviously the goal is to find devices that are most effective in identifying potential issues early or in helping to mitigate 'em. It's also really important for the solution to be very simple and intuitive for our customers because ultimately we're relying on them to actually install the devices and then pay attention to their apps and take action when there is an alert and respond to that. And then a little bit to your point, we love products and partners who share similar values around our mission to protect and care for our customers, but who really also offer that tangible value and engagement opportunity with the customer well beyond sort of that point of a claim. So maybe just to put that and bring that to life, I had highlight a couple of our partners who do this exceptionally well.
(
So the first is with our leak bot devices. Leak Bot uses one simple sort of clip-on device. You put that on your main waterline and it monitors your whole water use and it identifies leaks before they turn into a bigger loss and it's really easy to install. And then if there's any issues identified, they have a help desk that the customer can call in and if they still can't resolve it on their own, they will actually send out a license plumber to help. And the first $250 of any repair is covered. And Ting is also, yeah, really it's wow. Ting is also a very simple device. You just plug it into any outlet in your home. It measures electrical current to identify abnormalities before they turn into a dangerous fire. And they also have a phenomenal customer support team, a network of electricians who will come out and help diagnose and fix any issues with a thousand dollars worth of repairs included in their support model. So again, we look for simplicity, effectiveness, and then differentiated value and care for our mutual customers.
Patti Harman (
You're right, because if they don't use it, it makes a big difference. I have some water sensors throughout my house and I remember coming home, I'd been away for a day or two and I heard this noise and I was like, what is that? And I was surprised and fortunately it was outside where my HVAC system was, but there was water there. And so immediately it alerted me and I could address the issue before it became much more serious. So given that, what is the number one risk in a home and are there technologies available to help mitigate it then?
Sarah Jacobs (
Yeah, so I'd say there's a couple of notable risks that we focus on, especially because they're preventable. So water damage actually accounts for about a third of all personal lines claims with an average repair cost of around $12,000. And I can tell you from my personal experience, unfortunately, I experienced a water damage issue with a burst pipe and it was well above that By the time you consider the damage to the drywall, the flooring, the furniture that gets destroyed, and then the second is fire losses. So those occur at a lower frequency, but they are the costliest homeowner claims averaging over $80,000 in repair costs. And those are really the biggest proportion of our large losses on the property side. Now obviously homeowners insurance is designed to be there and to help you recover from these things when they do occur, but ultimately we want to go beyond that and provide peace of mind and help our members actually avoid that disruption, that potential loss of irreplaceable keepsakes.
(
Of course the safety concerns that are associated with these events. And yet it's interesting because when you look at smart home device usage, homeowners are generally overlooking those products that could provide the most preventative benefits. So a recent survey with homeowners showed us that only 19% of people have a smart home that monitors for water flows and leaks in their home. Only 15% have a smart sensor to monitor for electrical fire hazards, and 13 have a water shutoff device. So these are the devices that it can actually save you the most in terms of the most common and the most costly damages, and yet less than a quarter of homeowners are using them. So that's where we see really great opportunity
Patti Harman (
Of the homeowners who are using this technology. Have you seen maybe a difference in the number of claims filed then when property owners start using some sort of iot technology? Although I didn't realize how many weren't using it. Wow. Wow.
Sarah Jacobs (
Yes. Now I do feel compelled by my actuarial and data science friends to point out that we are still working towards building data that is fully statistically credible. So I'll call that out. But overall, we are seeing really positive signs and we do feel like these devices are making an impact, which is why at Nationwide, and I know other carriers are continuing to invest heavily. So just as an example, I mentioned Ting earlier, simple sensor that plugs into any outlet in your home and monitors for potential electrical fire hazards nationwide has put more than 60,000 tings into homes across the country, and we've seen them prevent close to 1000 potential home fires. So when you think about the danger and the disruption that a fire can cause, that's just really incredible. And then in addition to preventing fires, ting also provides information around things like power outage alerts, hazardous utility power notifications that can also be really helpful.
(
And then I mentioned leak bot, so we had a pilot in Ohio with leak bot last year and that went well. So we've actually expanded our partnership with them and since that over 25,000 leak bot devices have been ordered, and our initial results are showing that we've repaired 90 leaks in customer's homes, including 16, that we think would've caused significant property damage. And I realize those numbers seem small when you think about even the size of our portfolio and certainly the market, but it's a really big deal to those customers and it just gives you an idea of the potential that these devices offer. So we're excited to continue to grow our programs and to promote education and prevention programs across the industry.
Patti Harman (
Yep. It's just so important because you don't think about it until it happens. And so now you're giving them just a little bit more notice before something becomes even more serious. And as you're talking about implement, implementing this, are policy holders willing to use these technologies and what's their response usually when you recommend them?
Sarah Jacobs (
You definitely see that customer adoption rate of smart home devices just growing in general. So for example, our survey showed that 61% of customers use some form of smart home product today to enhance their home security. When it comes to our smart home program and the products that we're recommending, like anything new, there's a certain adjustment period there. It can take some time to create that customer and agent awareness and adoption, but we're very encouraged by the response that we've seen so far. Just to give you an idea, our new business utilization of smart home device offerings has increased about 200% last year, and it's already at more than half the adoption rate that we see for telematics programs, which that took us over a decade to reach. So it seems like the pace of adoption is increasing, also likely just reflecting customer comfort with the technology. But that's really why our mission is around education of both customers and then agents of course, because customers are looking to their agents for advice. And so we want to help them understand the value of maybe some of these devices that are maybe less known, maybe they seem a little bit less fun than a pet camera that shoots out some kind of a treat for your pet, but obviously we see really, really positive potential outcomes from these devices.
Patti Harman (
And you're right about the ease of use. So if it's easy to clip it on or plug it in or do whatever, I would hope that people would take just a few seconds to do that. What are some of the iot technologies that you're particularly interested in or that you think will have a positive impact in preventing some common losses?
Sarah Jacobs (
Yeah, so I think I've touched a couple of times on water and fire and how those are the two primary preventable non weather causes of loss where we see that immediate application for iot devices. But one interesting thing about Smart Home that is different than auto telematics and the experience there is that there's such a broad range of smart home devices in the market, but even just in the water loss prevention space. So you've got devices that range from sensors that you put in individual places around the home. You've got the whole house flow monitors, you've got the water shutoff devices, and we're experimenting with all of those devices in market today, and they each have their own set of benefits. Ultimately, we have to find that right balance between the loss prevention effectiveness and the cost and the ease of use for the customer.
(
So for example, water shutoff devices are ultimately the most effective from that loss prevention standpoint because they actually shut off the water, the main water valve for you automatically when they sense that there is a leak. So even if you're not at home, it can shut that off for you, but they're also the most costly and they require a professional plumber to come and install that on your water shutoff. So while that might be the right solution for some customers and some customers might be open to that, we also want to make sure that there's an effective solution for a broad range of customers. And then we also have to consider things like geographic differences in plumbing or contractor networks that are available for service. So it's definitely just been interesting testing and learning into new solutions.
Patti Harman (
I'm sure it has been. You mentioned Nationwide Smart Home program a couple of times. Can you just tell our listeners about that and what it entails, and then how is that changing the risk profiles for your policy holders then?
Sarah Jacobs (
Yeah, so I think I mentioned earlier that we originally started our smart home program with a similar mentality to auto telematics. We'll give you a discount to install this device and then we'll see what we can learn from that data. And that has really evolved over time to more of a focus on predicting and preventing losses, which starts with customer education and really those recommended devices are just one part of that value proposition. So we do have solutions that both new and existing customers can obtain today, and they go from non-smart devices like simple things like fire blankets to water sensors and shutoffs and ting devices as we've discussed. And I also mentioned we have seen significant increases in our adoption at new business and we partner closely with our agents. Again, it's really important to educate them so that they know what offerings we have available and they tell us that our offering is differentiated in the market and it really aligns really well with our mission of protection.
(
That's another interesting thing is we do see that these devices seem to appeal to protection minded customers, so customers that are interested in loss prevention that maybe have that propensity to try and avoid losses. So that's actually helping to shift our portfolio to align with more of that customer profile. So our goal is to continue to educate, to grow enrollment and protect more homes with devices really not just within nationwide, but truly across the industry, which is why I get excited about conversations like this one today because better protection is better peace of mind for our customers and ultimately safer communities.
Patti Harman (
I wonder how many people who are interested in using some of this technology have had experiences somewhere before so that they're even aware of it. Because I think sometimes I was talking to somebody and he was saying something and going through my mind was, oh, you've never lived through a hurricane, have you? Because I could tell by the comments that were being made that this individual hadn't had that experience. And I think sometimes if you had a house fire when you were younger or as an adult, if you've had some sort of a water loss, I think you would at least be a little bit more attuned to the possibility of trying to mitigate some of the difficulties that come with those types of claims. We talked earlier about telematics. Can you describe or our viewers, does telematics play a role in safer driving habits? And then I think Nationwide has a program called the Focused Driving Rewards hit you. Tell us a little bit about that as well.
Sarah Jacobs (
Yes, we are very excited about this. So does telematics play a role in safer driving habits? I would say absolutely, yes. So as I mentioned earlier, while telematics is certainly an effective tool to monitor driving behaviors and help customize or help customers control their insurance premiums, we've also learned that it can be a really powerful coaching tool and that we're able to incentivize safe driving behaviors through it. So we've had an optional coaching element to our Smart Ride program for many years now, and we saw that it was helping improve driving safety and it reduced distraction by about 10%. We were very inspired by those results, and we wanted to expand the impact that we could have through our programs. So we just recently launched our focused driving rewards program in 43 states. And the cool thing is this program is not tied to your insurance policy and anyone can enroll both nationwide members or non-customers, and it literally rewards drivers for reducing their phone use behind the wheel, and you can earn points that are redeemable for gift cards.
(
So the program only considers phone handling events, things like tapping handheld calls. So it's just fun because it's an easy way for customers to try out a telematics experience and be rewarded for that improved focus, and ultimately, hopefully it gets them a little more comfortable with that telematics experience. The other reason we're really excited about it is our preliminary results from our pilot showed that half of the participants did reduce their distraction levels while driving. And for those who did improve, they dropped by 48%. So if you just think about that and the impact that that can have on the roadways. So ultimately we believe that putting your phone down while you're driving can save lives and make roads safer, and we're willing to reward people for that. So every driver on the road has a stake in making our communities safer.
Patti Harman (
Yes, I would totally agree with that. So with all of the iot technology available, is there a downside to implementing it at all that you've seen?
Sarah Jacobs (
So I'd probably say not so much a downside, but maybe more hurdles that we need to overcome. So probably the biggest one is customers have concerns with sharing data and privacy. And interestingly, we probably see that a little bit more on the auto telematics side versus smart home. But I think we can overcome this. I mean, a, we're seeing adoption increase even within our programs and across the industry, but if you consider how many customers are willing to share their data, whether it's their loyalty card at the grocery store, that Alexa or Google device in their homes, the apps on their smartphones that are tracking them, it's probably more about helping them understand how the data is used, how their privacy is protected, and really how those devices can protect, can benefit them. And I mentioned before, iot devices are great, but education is really the key to this whole equation.
(
Devices can help coach, they can alert customers, they can greatly reduce losses in many scenarios, but we can't expect them to prevent a hundred percent of issues. There's still a very human element to that loss prevention, whether it's home maintenance or simple things like having a fire extinguisher or fire blankets in the home. So just continuing that education on simple steps that people can take to make our homes and our roadways safer for everyone. And then ultimately, there's still going to be times when those losses occur, and that's why insurance exists, and that's our noble purpose to provide protection and support our customers through that experience as well and make them whole again.
Patti Harman (
Wow. We have covered a lot over the last half hour or so. Before we take a few questions from our audience, I just wanted to ask you, is there anything that I haven't asked or that we haven't touched on that you think is really important for our audience to know or keep in mind about using IOT technology?
Sarah Jacobs (
Yeah, I think I would just reiterate some of the key themes that we've discussed. So iot devices offer some great opportunities to better protect customers and to make our homes and our roadways safer. And as a protection company nationwide is committed to leaning into those opportunities and helping to give our customers peace of mind. So we would love to see every homeowner protected with a water and a fire safety device, and for every driver to consider our focus driving rewards program. So if you have questions about our programs or learnings, feel free to reach out to me on LinkedIn, talk to your agent. We really need to keep this conversation going and get our customers protected because I believe that innovation, education and collaboration are the key to safer communities.
Patti Harman (
Great. Yes, I totally agree. Thank you. We have a couple of questions if you have a few minutes. One question was someone wanted to ask, have you seen a measurable decrease in distracted driving through your data collection? And then has that been quantified into perhaps live saved or damaged prevented? So I don't know if your research goes quite down to that granular level or not.
Sarah Jacobs (
Yeah, great question Franklin. And so as I mentioned, we definitely measure the decrease in distracted driving and internally we correlate that to our loss experience. And I can tell you that we absolutely see a correlation to less distracted driving people who sign up for a telematics program and loss performance, improved loss performance, so less frequency on the telematics side. I think it's a really interesting point. I don't know that we've actually quantified that until live saved. So I think we definitely work very closely on a lot of distracted driving programs and things with Ohio and other states, but I think that's an interesting way of looking at it. And then from a damage prevented perspective, again, we haven't published a number, but it's definitely sort of a metric that we track tied to our programs. It's great to see the impact. I mean, it's just really encouraging and it's why we're so passionate about them.
Patti Harman (
It's nice to know that you're making a difference and saving lives. So that's great. So another question from Joanna, is the data you're quoting Industrywide or for your current book of business at Nationwide?
Sarah Jacobs (
So the data, I think most of the numbers that I've mentioned on the call today are specific to nationwide. Obviously our homeowner survey that was not necessarily just nationwide members. So a lot of our data is specific to Nationwide, but I would say that a lot of our partners, we sort of collaborate them with them and they do have views that that are broader. So for example, Tang has great data on power grids and countrywide views, nothing individual or specific to customers, but they can share some really aggregate views that are really interesting and powerful and could have broader applications. So hopefully that helps answer that question.
Patti Harman (
I was at a conference last week and they were talking about the Ting technology and how because of that aggregate amount of data that they're able to pull together, they felt the thought was that in the future, if they're able to see that there's going to be an issue, they could notify the power providers so that they could shut down access to hopefully prevent some of the wildfires in the future, which I thought was a very interesting way to use that data aggregately to really prevent some sort of a major catastrophe.
Sarah Jacobs (
Yeah, there's a lot of power in getting the sort of networks of devices in place and that sort of aggregate data as you mentioned.
Patti Harman (
So another question from Sean at Nationwide, a smart, as smart home ecosystems mature, do you see a future where customers could earn a type of certified safe home designation or rating similar to how vehicles have safety ratings, and then how could that reshape underwriting or risk segmentation or even help create new insurance products? That's a lot to ask. Sorry. It's okay.
Sarah Jacobs (
Hi Sean. So yes, short answer is yes. We do see a future where some of that customers who take steps to protect their homes, they're rewarded for that in some way, whether it's a lower premium or some kind of a rating or a discount. We actually have that today in some ways, not specific to Smart Home, but for example, homes that are designated as fortified homes, they can earn a discount that's based on the resiliency of the home and how it's built according to certain building codes and that sort of thing. So there's elements of that that we're starting to introduce, but we do think that is a big part of the future, is understanding those steps that really help prevent losses the most, and how can we incentivize those behaviors as well.
Patti Harman (
So great. Well, thank you very much. Last question was somebody wanted to know how they could get the slides. We don't have the slides, but this has been recorded and it will be uploaded to the digital insurance website probably sometime next week. You can look for it under the Leaders Live. There's a tab at the top of the page, so if you wanted to see this interview or some of the other interviews that we've done in this series, you could access them there. So thank you so much, Sarah, for sharing your insights on all of these different types of technology. Thank you to our audience for joining us today. We hope you'll be able to join us next month when we discuss how the field of risk management has changed the role of technology and how risk managers are identifying new and evolving risks. I hope you enjoy the rest of your afternoon. Thank you.
