There are a few unresolved issues with the preventative / home sensor approach.
1. Sensors dramatically increase the acquisition cost for a policy.
2. It is unproven that sensors will mitigate losses. We all see the potential but there just isn't data there to tell us that.
If I could prove #2 then #1 becomes simple math, if the CBA is there then incumbent carriers will adopt it. It's just not there yet to justify doing outside of startups and market tests.
3. When carriers pick a partner and get into the preventative game then there's some liability that opens up if things go wrong. One could argue that the carrier is already covering the risk - this just means the preventative offering has to line up with coverage being bought.
4. Last but not least, the biggest source of losses is CAT related in property. Sensors will get at the second tier water and fire - again loss avoidance has to justify the sensors unless the preventative side is an ongoing fee service.
Sensors definitely increase the acquisition costs, although at least early on there's customers who see them as a benefit they're willing to trade the usual cashback/discounts/etc for, so its not as bad as you might think. We're also looking at ways to reduce the cost of sensors over time.
As for proving that sensors mitigate losses, even in our initial beta period we've seen a couple of potentially large escape of water claims avoided by early detection of a leak, and that's before we start introducing truly preventative measures as opposed to just detection. We're very focused initially on escape of water because those are in fact the largest source of losses in the industry - fire is fairly rare, theft tends to be pretty cheap to handle claims for, but a leaking dishwasher left while someone is at work for the day can easily require replacing everything on the ground floor of a small house.
So I wanted to try Neos after meeting a Zoopla exec who said they had invested.
But when the premium came out at over 4x my existing renewal quote I became less enthused.
And then I saw the Excess Charge (for making a claim) was £1,000 vs the £250 norm, I ran away to the nearest comparison site to find vanilla home insurance.
I think the conversion process might need looking at to make the benefits less nakedly focused on cost.
Give us another go in a few weeks - our initial trials we were partnered with Hiscox, and were bound to only their (really expensive) policies.
We're now in the final stages of rolling out our own policies which are much more competitive - quoting on my own house has our policies coming out cheaper than my current home insurance policy, with much better service.
1. Sensors dramatically increase the acquisition cost for a policy.
2. It is unproven that sensors will mitigate losses. We all see the potential but there just isn't data there to tell us that.
If I could prove #2 then #1 becomes simple math, if the CBA is there then incumbent carriers will adopt it. It's just not there yet to justify doing outside of startups and market tests.
3. When carriers pick a partner and get into the preventative game then there's some liability that opens up if things go wrong. One could argue that the carrier is already covering the risk - this just means the preventative offering has to line up with coverage being bought.
4. Last but not least, the biggest source of losses is CAT related in property. Sensors will get at the second tier water and fire - again loss avoidance has to justify the sensors unless the preventative side is an ongoing fee service.