The Internet of Things (IoT) is a network of interrelated devices that connect and exchange data with other IoT devices and the cloud.1 According to Statista, the number of IoT connections in North America is forecast to grow to 5.4 billion by 2025, up from 2.8 billion in 2019.2 Since smart home and property sensors can alert both users and carriers of impending risk, they have helped carriers move from a ‘repair and replace’ model to one of ‘predict and prevent’, providing opportunity for both loss avoidance and risk mitigation.
As we navigate the "age of connectivity," however, the increased integration of IoT technologies has allowed insurers to expand the ‘predict and prevent’ model. According to John Riggs, CTO and SVP of Applied Technology Solutions at HSB, "We've reached a tipping point in connectivity that enables an even broader model — the 'connect and protect' paradigm."3 This approach leverages advanced, connected sensor technologies to not only predict but actively prevent incidents by providing real-time data and interventions.
Per Riggs, at its core, "connect and protect" spans seven key elements: connect, detect, predict, alert, act, prevent, and protect. While "predict and prevent" remains part of the framework, it now fits within a broader, more comprehensive model. The effectiveness of this approach relies on the widespread availability of advanced, connected sensor technologies, which greatly expand our understanding of insured locations. This enhanced insight enables a broader range of responses and interventions, providing customers with even greater peace of mind.
Leading this IoT-driven transformation is HSB, part of Munich Re, with its Sensor Solutions program. This initiative allows insurers to leverage real-time data from smart sensors to mitigate risks such as non-weather-related water damage and electrical hazards. Client include Nationwide, Liberty Mutual, Philadelphia Insurance, New York School Insurance Reciprocal (NYSIR), Insurance Board and The Hanover Insurance Group Inc. HSB's sensors, powered by subsidiary Meshify, have generated over 57 billion sensor readings in the past five years, enhancing risk assessment and enabling real-time intervention to prevent potential damage. Per Christina Villena, Vice-President, Risk Solutions at The Hanover Insurance Group Inc, “The Hanover strongly believes in IoT’s transformative impact on the future of risk management and insurance. We see the value this technology brings to loss control and mitigation across a variety of business classes, and we are pleased with the results of our IoT collaboration with partners like HSB.”4
State Farm, a veteran in the insurance industry, is also leveraging IoT to transform its risk management strategies. Their innovation journey goes beyond traditional insurance products, expanding into the broader ecosystems of connected devices. By engaging with the interconnected ecosystems surrounding insured assets, State Farm believes the industry can better understand customers' comprehensive needs and provide tailored experiences that address them. Insurers can then take part in the collaborative development of ecosystem solutions, facilitating smooth integration into the growing IoT environment, as illustrated by their partnerships with companies like ADT and Whisker Labs.5
In March 2023, State Farm introduced a special offer for eligible new and existing homeowners in select states, offering access to an ADT home security system with professional installation at no upfront cost. As part of the program, policyholders also receive substantial discounts on monthly monitoring fees, and those without a prior security system discount can benefit from reduced home insurance premiums. State Farm's confidence in the program’s potential, coupled with positive customer feedback, has led to rapid expansion, reaching a total of 14 states by July 2024.6
In addition to its collaboration with ADT, State Farm has teamed up with Whisker Labs to help prevent fire-related losses. As dependence on electronics, devices, and the overall power grid grows, the frequency of electrical fires has been gradually increasing.7 Whisker Labs' Ting smart plug monitors a home's electrical wiring, detecting potential issues that could lead to fires. When a risk is identified, Whisker Labs alerts the customer, assists in pinpointing the hazard, and, if needed, coordinates with a licensed electrician to resolve the problem. In April 2024, State Farm expanded its Ting fire safety program, offering over 2 million Ting smart sensors to eligible policyholders at no cost. In addition to the smart plug-in sensor and app, customers receive a $1,000 credit for professional remediation of electrical fire hazards when required (provided by Whisker Labs).
Chubb is another frontrunner in utilizing IoT to transform risk paradigms. According to Hemant Sarma, Senior Vice President and Head of IoT at Chubb, IoT sensors are a "virtual watchdog" against water damage, the second most common cause of loss with an average claim cost of upwards of $90,000. These sensors, strategically placed in critical locations such as boiler rooms and HVAC systems, monitor for changes in temperature or humidity, vibrations and other infrastructure concerns.8
In January of 2024, Streamlabs, a Chubb company that offers smart water monitoring, leak detection and water shut-off devices and systems, launched Scout. Scout is a compact, modern point-of-leak sensor with a DIY setup. Scout can be used on its own or as part of the StreamLabs leak detection system. It sends real-time alerts via Wi-Fi to the StreamLabs mobile and web apps, notifying homeowners, tenants, or property managers of water leaks, while also monitoring temperature and humidity changes that may indicate leaks or frozen pipes. Easily installed without cutting pipes, Scout is compatible with the StreamLabs Control, which can automatically shut off water if a leak or freezing conditions are detected.
"Water damage is the number one source of non-weather-related property damage, which includes plumbing system failures, burst pipes or leaking appliances," said Sarma. "Scout makes water leak detection easy with early warnings to potential problems, providing peace-of-mind."9
Despite its potential, widespread IoT adoption in insurance faces challenges, particularly low attachment rates — the percentage of policyholders opting for IoT solutions. Even with compelling value propositions, participation remains low. As HSB’s Riggs points out, effective communication and education are key to driving adoption. Insurers must clearly convey the benefits of IoT integration and align them with policyholders' interests to boost uptake. Striking the right balance in engagement is also critical. Too much feedback can lead to "communication fatigue," while too little interaction may make the technology seem irrelevant. Transparent and meaningful communication is essential for insurers to maintain customer satisfaction and demonstrate the value of IoT technology.10
In this connected era, insurers are not merely offering coverage — they are actively safeguarding properties through intelligent, data-driven solutions. By adopting IoT, insurers enhance property protection and strengthen relationships with policyholders through improved services and engagement. As technology continues to advance, the potential for IoT to transform the insurance industry is boundless, paving the way for a more secure and connected future. With pioneers like HSB, State Farm, and Chubb leading the way, IoT is not just a trend but a fundamental shift in how risks are managed and mitigated.
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