Trends and Innovation in Home Insurance

Santalucía presented the 1st Santalucía Report on Trends and Innovation in Home Insurance, prepared by the group's Innovation Department in collaboration with the Spanish company Vecdis. This initiative of open innovation Highlights a series of technological trends that promise to revolutionize the Home Insurance sector in the coming years. Among the main findings of the report is the fact that Combining different technologies is key to creating valuable services that have never been possible before, making Home Insurance a more attractive product that makes life easier for customers.

“Insurance companies must respond to the needs of our customers at a time when peace of mind and home security is more vital than ever. For this reason, technology becomes our great ally. The use of the smartphone, the evolution in the Internet of Things or Artificial Intelligence are some of the technological trends that will mark the evolution of Home Insurance as we know it, allowing, among other things, ideas as revolutionary as anticipating the time of the accident” says Andrés Romero, Managing Director of Santalucía.

General information about Home Insurance in Spain

Currently, in our country there are 19 million homes that have Home Insurance, which represents 76% of total Spanish housing. The average insured home in Spain suffers an accident every two years and nine months, approximately. In addition, the data indicate that Every five seconds a mishap occurs in a home.According to data from Santalucía, the first weeks of the year are, historically, those with the highest number of reported claims. Specifically, in January 2019, 79,018 claims were declared in the company. On the other hand, according to UNESPA, the The main mishap that occurred in an insured home is water damage. In fact, there are nearly 2.5 million such accidents a year, one every 13 seconds. The next most common mishap is broken glass (one every 27 seconds) with a total of 1.1 million breaks. It is followed by support services with one million attended per year (one every 31 seconds).

Finally, according to Santalucía, Madrid is, followed by Catalonia, the community in which the most accidents were declared throughout 2019.

New trends, technology and home

The world of Home Insurance, with the advent of new technologies, has seen the opportunity to implement innovations that allow the improvement of the processes to be carried out, both by customers and by the insurers themselves, for protect and insure assets of consumers.These new technologies They allow us to improve processes internal processes, such as risk assessment or valuation of a claim, but also external processes, such as paying premiums or reporting a claim. Technologies such as Smartphones, drones and satellite images, Big Data, Artificial Intelligence and Machine Learning, Virtual Reality or Smart Homes are revolutionizing the home insurance sector. However, no single technology is capable of disrupting an industry. It is the combination of different technologies with innovative ideas that can bring this disruption closer.There are technologies such as Virtual Reality that offer improvements in very specific areas of Home Insurance. However, there are others such as Artificial Intelligence that affect numerous processes at the same time, from the assessment of risks and premiums, to direct customer service through Chatbots. Blockchain is perhaps the most promising technology, although it has yet to land in the area of Home Insurance.

1. Online services and smartphones

The development of smartphones and their arrival to the general public has been a revolution. These devices have become the main internet access window for Spaniards and have the capacity to facilitate steps that were previously unfeasible: carry out valuations of the assets they have in the home with their mobile phone camera, receive options for the coverage they need, reduce the time needed to contract coverage, facilitate access to insurance for customers through an intelligent use of technology, electronic payments, etc.

2. Drones and satellite images

Satellites, planes and drones are capable of deploying high-resolution cameras and sensors that provide additional data streams in real time. The most powerful Machine Learning techniques can now convert these images into relevant risk information in real time.Examples of use: high-speed claims processing, prospective view of property risk to determine the price of insurance, drone insurance, inspections to assess risks or damages, assess risks in advance, monitor the evolution of weather phenomena...

3. Use of Big Data, Artificial Intelligence and Machine Learning

Today's world is characterized by the large amounts of data that are generated at all times and what makes the difference is the ability to extract information from them. The mix of different technologies can allow us, for example, to assess potential risks in a specific address, help customers file claims and send videos to describe an incident, make comparing Home Insurance as simple as possible... and much more!

4. Virtual Reality

Virtual reality, which technically consists of building an environment using computer technology capable of creating in the user the feeling that they are immersed in it, offers great possibilities in terms of Training of experts through a test environment.

5. Smart Homes: Smart Homes

Smart Homes (houses connected through sensors or devices that allow us to operate according to user orders) are an enormous opportunity, perhaps the greatest, for the insurance industry because each data collected becomes a new opportunity to provide greater value to customers. In Spain, the number of Smart Homes is expected to multiply by five, going from about 750,000 in 2017 to around 3,750,000 in 2023. The Internet of Things is the most used technology when it comes to the elements that make up a Smart Home . It's about digitally interconnecting the elements that are part of the home.

• Product customization: The approach of one-size-fits-all pricing across personal lines will be replaced by automated and continuously updated risk assessments.
• Monitor water leaks: Damage caused by water leaks is often the main problem that insurers face. Smart connected detectors have been developed that detect water leaks to prevent and reduce accidents.
• Monitor home security: Security against possible theft attacks is another concern for customers. Beyond alarms and surveillance companies, there are other possibilities to manage this problem: through devices that warn of possible incidents.
• Multifunction sensors: Sensors connected to the Internet via WiFi that can be placed anywhere in the house and measure light, sound, acceleration, humidity, temperature, orientation, proximity and frequency.
• Comprehensive Initiatives: There are insurance companies that, in view of the projection and possibilities offered by Smart Homes, have begun to create alliances in order to give customers access to devices to make their homes intelligent.

6. New opportunities brought by the adoption of new technologies

The arrival of new technologies, beyond their implementation in company processes or the services available to customers, is also an opportunity to offer new products that are closer to the new reality that is being implemented in the world. Almost all experts are clear about the large number of opportunities offered by the Blockchain, but no exclusive implementation has yet been seen in Home Insurance. However, it is the perfect element for developing parametric insurance.

Adapting Home Insurance to COVID-19

The new reality that the onset of COVID-19 has brought to our lives means that Home Insurance is getting closer to the customer, focusing on the maximum possible customization of the product, especially thanks to the Internet of Things. In this way, it will be possible to prevent having to make payments for claims and to avoid inconvenience to customers as much as possible due to situations that unexpectedly change their daily lives.

Santalucía and its commitment to digital transformation

This report reflects, once again, Grupo Santalucía's commitment to technology and digitalization as part of Digital Transformation Master Plan which the company launched last January and in which it will invest, over the next four years, more than 200 million euros.