Some very exciting R&D is currently underway attempting to reduce insurance claims in strata blocks using the internet of things (IoT).
To refresh your memory, the IoT is a network of physical devices that talk to each other. In strata, it can include fire systems, power systems, water systems, cameras, appliances or basically any electronic device that can communicate with another electronic device.
So what’s this got to do with insurance? A lot!
Stephen Dalton from Australian IoT pioneer Refactor (he’s been working on this stuff well before the term IoT was coined!) explains that “the impact of the IoT will revolutionise the risk minimisation process for strata schemes by allowing early intervention.”
But before we imagine a hand-shaped drone flying out to catch a cricket ball on track to hit a window, there are plenty of simpler solutions to think about that could minimise damage and potentially prevent the loss of life. On the market currently are sensors that can track most things such as:
· Water usage and flooding
· Temperature/Humidity/Barometric Pressure
· Motion & vibration
· Light
· Power usage, device On/Off
· Utility metering
· Waste sensors
· Air Quality
· Security
Linking these sensors using the IoT is where the technology will provide simple but effective solutions.
Keeping in mind that strata insurers pay out hundreds of millions of dollars each year for claims that could possibly be preventable by this type of technology, there is no wonder that their interest in the area is growing.
From an underwriting perspective, a block with IoT connectivity which substantially reduces the extent of damage is going to attract a lower risk premium than one without. An installation like this will allow for more profitable policies from an insurer perspective.
And this also means reduced premiums for Owners Corporations. It is this premium reduction which will create a tipping point where it would be financially beneficial for a scheme to retrofit this technology to reduce insurance cost.
There are of course many complexities in the bespoke design and installation of such systems to existing buildings and then there’s the challenge of quantifying how much risk a system will actually abate.
It’s a long road ahead but with people like Stephen working on combining the hardware with the software, it’ll happen sooner than most think. No doubt we’ll start small with basic sensors but I’m keeping my eye out for hand-shaped drones that catch cricket balls!