Take a look at Google's Nest and Internet of Things efforts, and you'll notice a growing list of data-driven businesses lining up to dive in or at least dip their toes into the IoT waters.

One recent example: Liberty Mutual recently joined Nest Safety Rewards -- which allows insurance companies to give policyholders discounts based on their Nest Protect device data. American Family Insurance has a similar strategy under way.

Policyholders participating in the programs provide data on Nest device battery life, whether sensors are working, the state of Wi-Fi connections, policyholders’ zip codes, and rooms with smoke detectors. The insurers are offering discounts to participating customers of about 5 percent off their premiums.

In a statement announcing the service, American Family said it would provide the Nest Protect devices at no cost to participating policyholders, explaining the devices will monitor potential risks and allow users to check statuses, make adjustments and receive alerts, even when not at home, via a smart phone or tablet. 

This marks the early days of telematics for the home, in which, like cars, if safety is demonstrated via devices, discounts are provided. Overall, insurers are gaining greater insights into policyholder risk factors, and are able to price that risk accordingly.

As with the automobile telematics programs that have proliferating across the industry for the past few years, there is an extremely valuable byproduct coming out of these programs, along with customer goodwill and loyalty: data. There will a lot of valuable information about policyholders’ home safety systems streaming in, with potential for mining and analysis patterns to better understand and mitigate risks – be it fire, theft, flooding, or natural disasters.

Insurers are increasingly leading the way in moving to the so-called Internet of Things (IoT), in which data is streamed from devices all over the globe to monitor events and help make intelligent decisions, as well as drive down costs.

As more information comes online from vehicles, homes and individuals themselves (through mobile and wearable devices), insurers are destined to become data companies. With that comes great responsibility, not the least of which is building and managing an infrastructure – cloud-borne or with data centers – that can maintain the security, quality and accessibility of the data.

This article courtesy of Information Management's sister brand, Insurance Networking News.

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