Home Insurance Discounts? Unmonitored, monitored? California

I’m adding this Forbes article link here, as it seems highly relevant and I don’t want to lose the context:

http://www.forbes.com/sites/aarontilley/2014/07/30/smartthings-smart-home-services/

Allstate already offers a 25% premium discount for those who sign up for a home monitoring service. “I don’t know if the insurance industry will change their model fast enough,” Hawkinson says. “Smart homes absolutely eviscerate the current system. Insurance is a tax on society. It should be less.”

…CP / Terry.

1 Like

Great article, Terry. And, incidentally, this article was the means of me first learning about SmartThings.

One of the challenges we will struggle with is consumer privacy. An example, OnStar has been around since 1995, yet one of the leading innovators in Auto Insurance pricing just recently announced an OnStar related discount:

I believe that the delay had mostly to do privacy concerns - people were reluctant to open that kimono.

I’d like to ask this forum a question - how willing are you to share and allow for the aggregation of your home data to enable insurance companies to gain the insight needed to substantiate Smart Home related discounts? What assurances concerning the use of the date would your require to be willing to share?

It’s not just that insurance companies need to prove the value to their shareholders, but most state insurance regulators will require evidence to substantiate discounts.

I think this is funny since a ‘professionally monitored’ system basically means that some part time college student making minimum wage in the midwest somewhere is making decisions about your security. Clearly a smart home is a much better and safer option. I think the insurance industry needs to play catch up.

3 Likes

Just an FYI. When I informed my insurance company that I have a system in place that monitors against intrusion, water damage, and fire, their only question was whether the system automatically notified fire and police. Since ST doesn’t, my discount was a whole 1.5%!

Cheers,
David

I agree that “professionally monitored” or simply monitored at all is a weak standard, but it has been the only really reliable differentiator historically.

It reminds me of the time my wife asked our niece to “watch” our son. She did - she watched him crawl halfway up a set of stairs then tumble down. When asked what happened, she responded sincerely, “I was watching him - I watched him crawl up the stairs and then fall all the way down.”

The point is, the insurance industry will want more than a “Smart Home” with regard to giving discounts. Insurers will want to see that Smart Homes will have predictably better results with respect to preventable losses than homes with no smart systems.

To that end, people who want some insurance benefit will need to be willing to share their data to demonstrate improved loss costs and the industry will have to report back on which behaviors and automated home uses matter most in the form of discounts for loss improving behaviors and surcharges for loss increasing behaviors.

Do (any/all) “Professionally Monitored Systems” (or any home security systems) actually directly contact local Fire and/or Police (and/or 911) based on non-user initiated events?

Or do these systems route everything through insourced or outsourced Central Monitoring Centers, which, in turn, are authorized to manually contact the local Fire/Police, etc.?

As I mentioned, somewhere, even individuals can establish personal contracts with wholesale Central Monitoring services, some of whom would be very happy to increase their customer base by certifying SmartThings to be compatible with their offerings…

…CP.

Maybe somewhere, but I have had 3 different companies over the last 10 years and none did. All three just hit their control center then they called you and/or your contact call list. Once they got someone they asked what to do. They would call the appropriate responder, but only if you directed them to.

2 Likes

I use Protection1, and when I get an alarm, they call me to validate. If I don’t answer, they immediately dispatch police.

This, however, is essentially a call center service, which could easily get notifications from a SmartThings system with call handing instructions.

2 Likes

I work for a police/fire department as a 911 dispatcher. None of the alarms come directly into my center they all go to ADT or whatever company the homeowner/business has. The alarm can sometimes be a 5-10min delay. The reason for the delay is that the alarm company will try and contact the owner on the account to verify if it’s a real or false alarm, depending on the type of alarm that they received. So in all aspects ST is a better and somewhat a more reliable system because it skips the middle man and goes straight to the end user. Plus, you do not have to pay for someone (middleman) to monitor your alarms and make the decision to call the police/fire department, that’s if you gave the alarm company the correct information, or they looked up the information on google/whitepages or anything else. The other delay is that some alarm companies will call the wrong city/county/state and then the dispatcher has to figure out what city/county/state your house is really in… (I have been doing this for 10 years, I live in Texas and I have had alarm companies call me to give an alarm that was in Kansas, Florida and even NY. Just saying…)

So in my opinion ST is a great system to have!!!

1 Like

So how do we convince home insurance companies of this value in risk reduction and earn a discount on Premiums?

1 Like

First you have to ask your agent. This demonstrates market pull. Then they’ll go off and do all their usual actuarial stuff.

I spoke with my State Farm Agent, who said State Farm is offering 10% premium discount for fully monitored systems on their approved list (ADT and a few others), and 2% premium discount for owner-monitored systems on their approved list (which right now he only had IRIS from Lowe’s listed). He said the system has to include a system-branded video camera and smoke alarms, since those are the two things where State Farm has actuarial data showing real reduction in losses.

https://www.statefarm.com/insurance/home-and-property/homeowners/discounts/home-monitoring-offer

Smoke Alarms are obvious, but apparently video is what helps in catching minor thieves, and recovering of stolen property reduces insurance payouts. They also have some data that video monitoring reduces burglary attempts.

Iris qualifies since they sell a branded video camera. He said no one had asked about SmartThings yet at his office, but Staples Connect was turned down because it was a “multisystem” video!

Very 20th century thinking in terms of accepting only a specific set of devices, but there it is.

Separately, and purely unofficially, a friend told me that Allstate’s security system discount applies only to professionally monitored systems that are also “key code entry.” He tried to get a discount for an Iris system (which State Farm would have granted), but Allstate said no. But they would grant it for Simplisafe.

Farmers required “•Install a security system with an outside signal and connection to local police.” but didn’t offer the discount in California.

So I think there’s still a lot of variation from company to company.

But step one is definitely to ask your agent. Even if they say no, it helps raise their awareness that the systems exist.

This topic is something I would really like to see someone from ST comment on. Are there any plans to partner with various monitoring services? Are there any products coming out that enable ST retrofits with existing wired alarm systems? Are there any alarm panels coming out that work like a traditional system but use zigbee/zwave motion detectors and contact sensors?

1 Like

I don’t want to see ST join with a monitoring company. I’m trying to not spend the money for a company to do what I can do for fee… The insurance company’s need to catch up to time and understand that people would rather monitor their own system…

I saw some ppl say that some insurance company’s require security cameras to the system. ST is able to use drop cam. But my other thing is why can’t you have your own security camera separate from ST such as I do?

Something to get with your insurance company face to face and show examples of how what ST has to offer…

1 Like

Insurance companies are looking for statistically verifiable reductions in losses. So “does work” instead of “should work.”

When the camera is branded as part of the system, the insurance company has something that’s easy to run statistics on.

As soon as they have to start taking into account every interoperable model, it just becomes a lot harder for them to track, and therefore to justify giving discounts for. And the tracking itself costs money.

Doesn’t mean they won’t/can’t, but it’s easy to see why the first stage of discounts would apply to single brand solutions from big companies. They’re not looking for the quality of any one individual install but rather an easy way to instantly evaluate the potential contribution of hundreds of thousands.

Exactly JD - They key is statistically verifiable and consistently reliable.

Great dialogue on this.

One more data point - Allstate agent said they’d offer a 5% discount, just need a “certificate to provide proof to the underwriting department”

  • I suppose we still have no way of getting said certificate from SmartThings?
1 Like

That certificate is a standard insurance request. You won’t be able to get one from smartthings, because they don’t qualify.

What the insurance company is asking for is the certificate showing that the security system is professionally monitored by a UL listed company which is authorized to call 911.

Like I said, SmartThings can’t issue one because they don’t offer that service.

For discussion of similar certificates, see Simplisafe.

Ask your insurance company for the exact details of the certificate they want and it will almost certainly be “UL listed monitoring.”

Yep, seems likely. The 5% discount sure isn’t going to cover the cost of the professional monitoring!

Off-branded monitoring can be purchased at under $10/month (long list of services available).

They just need to work out a way to connect to ST Customer accounts / Events… REST-API, perhaps?

There’s a hardware issue. The only UL listed central monitoring services I know, even the $9 a month ones that work with self installed systems, require cellular or landline connection. No internet or WiFi, it’s just not considered reliable enough for fire and security.

This is typical:

Your security system is designed to plug into a device called an RJ31X jack installed at your premises on one of your regular telephone lines. When activated, a relay in your security system “seizes” your phone line and gives the security system priority use of this line, allowing the security system to report its signals to the central monitoring station using a toll-free number. Don’t have a landline? No problem. Most security panels offer a GSM cellular option (SecureLinc for example). These panels are compatible with this monitoring service.

This is the hardware piece a typical ST installation is missing.

© 2019 SmartThings, Inc. All Rights Reserved. Terms of Use | Privacy Policy

SmartThings; SmartApps®; Physical Graph; Hello, Home; and Hello, Smart Home are all trademarks of the SmartThings, Inc.