Smart homes as foundation for new business models

This article was published in the February 2020 edition of Schade-Magazine.nl and reflects our presentations and initiatives on big data and smart living.

What opportunities does data offer for the insurance industry and its customers? Our Experience Design Strategist Peet Sneekes connects themes related to design, the Internet of Things, blockchain and new digital business models for clients every day. There are myriad chances here for the insurance industry.

“We work on products that our clients are not necessary requesting – we simply follow the technology in that direction,” says Sneekes. “We call it an innovation program as it aims to address a bigger picture of ways to use technology to enable a better, healthier life and a better community. Pension insurers, for example, can focus entirely on paying out pensions, or they can also ensure that people have good and healthy lives even before they retire. In some respects, this can be more interesting for the pension insurers.”

Ambient smartness

One of the overarching topics in the Mirabeau innovation program is smart living, which focuses on the question of how people can live a healthy and clever life in a smart home. This involves making the step from big data to ambient intelligence. “The term ‘smart home’ quickly brings to mind smart meters, wall devices or table appliances that enable interaction with electrical devices in the home,” Sneekes says. “These are gadgets you can instruct to do things like switch lights on or off or turn the heating up and down”. That’s why we like to talk in terms of ‘smart living’, a more holistic view on things.

“It becomes really interesting if these actions are automated and you don’t need to think about them. We call this ‘ambient intelligence’, and it ensures that everything around you responds to your needs, the needs of your family or even your entire community. This is where the concept of 'smart living' comes from. After all, the issue at hand isn’t a smart meter, smart house, or even smart streetlamp, but a better life for individuals, their families, their neighbourhoods and their community.”

A data pack for the house

Sneekes feels that the best way to create ambient intelligence is by combining a range of different technologies, in particular the data they provide, and then build an appropriate service on that foundation. “Houses are already filled to the brim with smart devices: televisions, energy meters, routers, cell phones, boilers, devices featuring the Internet of Things, and so on. Now imagine if you could put all the information collected by these devices together in a sort of data backpack for the house, and the house itself could take decisions to make the lives of its inhabitants easier and more pleasant.

“Such a house would, for instance, recognize when it needs to heat which rooms and when not, ensuring greater comfort and higher energy savings for the residents. It would also know when maintenance was needed, and when to make an appointment with a handyman, or painter. And for that handyman this could be a signal that the houses next door might also need maintenance, based on which they could offer the residents a good deal with a discount. When people choose to make their data available, they can receive a valuable service in return.”

Proactive package

The usefulness for insurers of the information in such a home data pack is easy to see. After all, it is well known that damage to household effects and buildings mainly occurs when maintenance has been neglected, due perhaps to changes in the family composition. But overdue maintenance of human bodies or new neighbors with a rowdy child who often comes round can also take their toll.

“Insurers now generally offer packages that are very defensive. This means that, if things go wrong, customers receive extra money to fix the situation. In our opinion, insurers could also offer more proactive packages, like subscriptions to advice or interventions that prevent unfortunate consequences.

“Insurers are also worried that they don’t have regular contact with their clients so don’t have a good feel for what’s really going on in their lives. They have statistics and can set up a panel or organize an open day, but a continuous flow of data would, of course, be many times more valuable. Naturally, they would have to respect personal privacy and do nothing without their customers’ consent – but they could also reward clients for their data, for example by contributing to maintenance or, in a broader context, helping organize neighborhood safety. In this way, insurers could supplement their business model or maybe even replace it.”

Trading platform

Sneekes feels that much remains to be done before ambient smartness can be fully realised. “While there are already lots of smart devices in homes, the data they generate is used almost exclusively by the companies that produce or own the devices. These individual data streams are now sometimes used to improve the services of those companies or enable smarter billing. They’re often also sold to companies and government authorities by so-called data brokers, but this isn’t conducive to a valuable relationship with the actual people living in their houses.

“What we would like to see at some point is these companies realizing that the data doesn’t belong to them but to their clients, and that it can be valuable to combine data from other people and multiple sources. Only then can we get better ideas on how to improve customer lives or make them more pleasant.

“We are currently experimenting with several companies to see how we can move forward with this model. In fact, we are looking to set up a kind of trading platform where companies can acquire different aspects of client data backpacks in exchange for providing a service for a given duration. This is about a fair exchange of valuable items that can benefit both parties. That’s the toughest nut we have to crack.”