Smart Home Technology

Looking at the insurance industry through the Google lens

Whenever I’ve asked an executive of one of the big insurance companies why they’re interested in InsureTech (insurance technology) they’ve universally said ‘Google’.  The insurance industry is already in a pretty difficult / profit-strained place, and it realises that they’re one knock-out disruptive punch from a technology giant like Google from obliteration.  OK, obliteration may be overstating it, however technology undoubtedly has a habit of making fat / slow moving industries feel uncomfortable - just ask any London Cab driver about the impact of Uber on their livelihoods.

Having spent the last 10+ years working in advertising technology I’m hugely aware of the disruption a company like Google can have on a market.  Google now owns 30.9% of all digital advertising revenues around the world (via its Adwords and ADX platforms), and 80% of publisher infrastructure (via its DFP product).  Of course, it also owns 63.9% of search - which is where Google’s fortunes started.

In short, today Google owns digital advertising.  But that wasn’t always the case.  15 years ago Google was just a couple of guys in a garage with an idea.

Given that Insurance companies are so worried about Google, I thought it would be interesting to chart Google’s meteoric rise to global advertising dominance to give some context, and providing some kind of indication of whether Google’s shaping to take the world of insurance in the same way it took over the advertising industry.

 

  • 1998: launches search engine which quickly becomes popular
  • 2000: works out how to monetise search results via sponsored listings ‘AdWords’ product
  • 2003: grows non-Google owned advertising revenues (e.g. on 3rd party publisher websites) via launch of ‘AdSense’ through the purchase of Applied Semantics
  • 2005: launches Google Analytics, as a 3rd party measurement service, based on technology acquired from Urchin.  At the same time quietly acquires mobile operating system Android (an early prescient mobile bet)
  • 2006: acquires YouTube seeing the future of video
  • 2007: sees the future of the internet is mobile, and formally launches Android (after its previous acquisition in 2005) along with AdSense for mobile
  • 2008: decides it wants to own the wider internet advertising plumbing on the supply side by acquiring ad technology company DoubleClick
  • 2009: doubles down on mobile monetisation via the acquisition of mobile ad network Admob
  • 2011: furthers its 3rd party publisher monetisation technology stack via the acquisition of Admeld
  • 2014: acquires Nest, seeing the future of connected devices in homes
  • 2015: Google becomes Alphabet, allowing to legitimately (from a brand and markets perspective) carry on its diversified investments

Data has been core of Google’s strategy from Day 1.  Openly stating in its mission early on that Google was dedicated to ‘making information more accessible’.  With its own platform it worked out how to monetise this data via its native ad product ‘adwords’.  It then worked out how to monetise the web outside of its owned platform (and control major parts of both the supply and demand sides).  Now that Google has a strong grasp of how pretty much everyone around the world interacts with the open web, and specifically what people’s ‘intentions are’ - as that’s what search is about, it’s about your intention to do something / know something.

Given Google knows pretty much everything about your virtual life via data, the biggest area that Google doesn’t know about, is what happens in your real life (although it can obviously infer a great deal).  And that’s what I’d say Nest is about - putting sensors in people’s homes that generate data on people’s real-life behaviours.  At present the use of this home behavioural data is inert, unused -  in the same way that a person’s Google search results were a few years ago.  And, it’s likely that Google will continue to play dumb and not do anything about this data for the near future, just as it did with Google search, YouTube and its other services.

I can guarantee that in the future Google will make a play to unify people’s virtual behavioural data with their real-life behavioural data, and with such a chunk of real-time and historic data of individual behaviour, along with aggregate meta trends and predictive AI-driven data, you can see how this puts Google in a hugely strong position to develop industry-changing insurance products.

That said, Google doesn’t win at every industry it enters - anyone remember Orkut, Google’s social network?  The big insurance companies can either pray that Google gets insurance wrong, or work out how to beat Google at its own game.  The main challenge for insurance companies is that insurance is an industry ultimately based around ‘data’, and Google has a particularly strong record of winning when data’s at play. 
 

Observations on the UK InsureTech industry: 8 iOT companies shaking up the insurance industry

I’m very much new to the InsureTech industry - well at least the ‘insure’ bit.  Via my work with AMCO I’ve observed that the worlds of security and insurance have always been close - but the two have never had the inter-connected impact that perhaps they should have, and nothing hugely innovative has ever spun out of the security/insurance intersection.

That’s arguably about to change, with the increasing ubiquity of smart home devices / sensors that can collect data about a person’s home activities - good and bad.

Last night InstechLondon hosted their ‘Connected Insurance' event in which 8 of the most interesting InsureTech-related iOT companies were showcased.  Here’s a quick run down of what I learnt, and how they’re trying to shake up the insurance industry . . .

Domotz

Domotz is a remote monitoring service for your network devices, giving your more knowledge of what’s going on with your smart home devices.  The idea came from an individual problem that one of the founders identified: i.e. the fact that he’d amassed 10’s of different connected devices in his home, but a lot of them didn’t work / weren’t connect properly to each other / the network.
The platform is completely device agnostic, and is designed as a ‘plug-in’.  From a business perspective, the Domotz team said they were developing out x3 proposition:

  • Connected home monitoring product
  • Cyber attack monitoring tool
  • Application gadget insurance.

They stated that they were already embedded in various hardware companies, had a partnership with BestBuy and were building out an analytics platform with SwissRe.  All-in-all they seemed to have got some good traction, and identified a growing problem within the iOT infrastructure - given that there’s estimated to be c.26 billion iOT devices by 2020.


Leakbot

In short, Leakbot is a water leak monitoring service.  Spun-off from Home Service company HomeServe, Leakbot identified that most leak detectors require you to second guess where your water leak is going to happen.  Leakbot is designed to monitor your hole mains water system for leaks - meaning that you only need one Leakbot device per home.

The Leakbot system works by monitoring the flow of water through your mains water pipes, detecting any anomalies from usual day-to-day patterns - and warns you when it spots any anomalies.  All of this is done via a software layer of machine-learning.

With Escape of water claims making up 25% of all UK home insurance claims (totalling c.£700 million) this has an obvious application in lowering insurance claims - through early prevention.
For the insurance industry, the good news is that Leakbot is cheap enough per-unit that it’s possible for Insurance companies to give the product away for free - which Aviva has recently started doing.

Neos

The starting point for Neos is that ‘customers don’t like insurance’ and so Neos’ proposition is that they can add value to a person’s experience of insurance.  To do this they’ve based their product around ‘Smart Home Technology’, providing a suite of smart home sensors covering burglar, smoke and water detection.  All of these devices are designed to collect data, fed through a user’s app.  They’ve created a ‘service layer’ on top of all of this, meaning that whenever there’s an issue detected, they can provide a service to solve the issue - i.e. sending police, plumbers etc. 

They claim that their core IP is around creating an iOT platform - starting with the home, but in time moving into the car and health.
Their founder, Matt Poll, stated that the core challenges to the business are:

  • How to get an insurance carrier to cover (which they’ve recently done via a partnership with Hiscox)
  • How to get distribution.  Matt said that distribution is key, but that he was proud to announce a 'distribution partnership’ with a company who will make the quotation process easier / more friction free.

Audatex

Audatex is a B2B service provider to the insurance industry that steamlines the assessment and estimating process for insurance claims.  Their biggest space is the motor assessment space, seeing 95% of motor assessment - providing processes to help check mechanics are quoting accurate time and parts for repair work.

Expanding beyond this role, Audatex are starting to help use data to flow through to risk assessment - with a mission to make the most of our are and (now) connected home data.  As a business they’re connected to carriers and car manufacturing - placing them in a very strong position to help both industries innovate.

They stated a statistic that 80% of people are happy to share data along as there’s a value to it.  Their position is how to help customers make the most of that data - and how to create a policy of the future which takes into account data.

There’s an interesting wider question of how an actuary would price this data into a policy - which is still something the underwriting industry is grappling with.

Esri UK

Esri are a specialist GiS company, providing insurance companies and government clients with GiS mapping data.  For insurers, historically they’ve used GiS to track things like properties to the proximity to flood zones, however they’re now looking at how GiS data can be used to track ‘movable asset’s (e.g. like huge container ships).

They’re now working with a partner that track AiS feeds (which is shipping data).  This data is mostly used to help ships from bumping into each other, but what they’re now doing is providing this data to insurers so they know where their assets are, enabling them to get alerts when their assets approach high risk areas (e.g. piracy / high-risk weather areas).

Similar to Audatex, there’s a question of whether there’ll be any traction from insurers: e.g. providing data to enable them to insure on a minute-by-minute basis.

360GlobalNet

360GlobalNet is a platform that allows all parties to claim efficiently - by providing processes to the claimant to gather appropriate data to share with the insurer (e.g. photos / videos of the claim).  Through using 360GlobalNet, insurers have seen indemnity claims down 15/20% and costs down 20%.

Interestingly the representative from 360GlobalNet stated that they don’t use an app, which may be representative of the one of nature of an insurance claim - meaning that the user-experience of downloading an app was not relevant.

The example he talked through was the event of an incident e.g. escape of water. The first point of contact is via email and phone.  The claimant is then sent an SMS, which links to a webpage where the claimant can fill in all the relevant information and upload relevant images and videos. The claims handler can see all this information in real-time and is able to make decisions - via a simple workflow.  The system can also live streaming too - which is important especially with complex claims / large loss.  Using video they see a massive lowering in claims charges from contractors, as the information provided is 100% real.

Overall they claim to see an average claim response time of 87 minutes from upload of information and settlement of claim - which seems impressive.

Felcana

Felcana provide dog and cat monitoring - hence the name (for all your latin students!).  Their bold claim is that by 2025 they expect to see all pets connected to the internet, and what Felcana allows pet owners to do is to track the health of their pets.

Founded by Dr James, who’s a vet and ex-Bain consultant, Felcana’s product is a mix devices (a pet tracking device and home sensors) and an app.  The pet tracking device (the Helix) fits on the pet’s collar, and is elegantly designed.  The home detectors (beacons) are designed to enable owners track the activity of their pets around the house e.g. how often they go through the cat flap.

The connection to insurance is linked to Felcana’s aim to spot ailments early - like hip displacement which affects a high percentage of all dogs - therefore lowering vet bills and claims.
Felcana is currently raising funds via a KickStarter campaign.

30mhz

The 30Mhz pitch is simple: smart sensors for industry grade insights, giving industrial organisations (farms, ports, factories)  real-time metrics for their assets.

Anthony, one of the founders, explained that they were called 30Mhz as 30Mhz is the radio frequency with the highest frequency radio wave - and the one with the longest range.
The 30Mhz is a platform that goes from sensor, to cloud to dashboard.  30Mhz was initially set up as an API, but now provides dashboards - as most clients wanted dashboards to deliver the data they collect.  The 30Mhz is technology agnostic, working with any type of sensor - creating a sensor network.

Two examples / case studies Anthony gave included:

  • Port of Amsterdam: the Port of Amsterdam has a lot of fixed assets.  Using 30Mhz they’ve attached pressure sensors to ‘docking plates’ (amongst other things), so that they can measure the wear and tear of the machinery, spotting issues early and enabling the Port to repair machinery before it breaks - and causes any issues - therefore optimising port utilisation.
  • Pepper farmer (agriculture): apparently peppers burn easily - easily getting something 'sun scold'.  To prevent sun scold the farmer (and any solution) needs to know the temperature on the skin of the pepper.  30Mhz created aIR temperature gauge that points at the skin of the peppers, and measures temperature on skin - alerting the farmer to peppers whose skins are getting too hot.  According to the farmer with the help of 30Mhz  they’ve increased yield by 6%, and generated 1000% ROI from the technology.  Impressive stuff.

Concirrus

Concirrus provide a platform that enables insurers to turn iOT data into risk data, usable by underwriters to factor into their risk profiling.

In a world in which there’s an increasing amount of iOT data being created from devices, Concirrus provides a way for the insurance industry to make the most of this data.  The company was started by 2 guys a few years back who spotted that there was a lot of data being made available from the iOT, and so wanted to connect the dots to how this data might be made useful - in the context of the insurance industry.

Ultimately Concirrus helps insurers get a better understanding of their customer - via data.  What the product looks like in practice is a series of APIs (connecting the data) and dashboards, helping visualise the data.  The platform is agnostic, connecting to all types of sensors.
As a vision of where the product may go next, they understand that revenue from home insurance premiums is limited, and see the data provided by Concirrus as a way to cross-sell new services.

Flock

Flocks pitch was quick and simple: Flock provides big data driven risk analysis for drones.  As drones increase in prevalence there’s a need to insure the risk against these.  Flock provides the ability to indentify, quantify and minimise this risk. 
 

Insights into how the Smart Home landscape is evolving: a beginner's guide to Smart Home technology

I spent a week earlier in the summer in San Francisco, exploring the burgeoning Smart Home technology space, trying to get my head around what’s really happening under the surface beyond the headline-grabbing fundraising activities of companies like Ring (a next-generation doorbell company that raised c.$100m) and emerging battles for the space amongst the big tech boys (including Google’s $3.4 billion acquisition of Nest and the launch of Amazon’s Alexa).

What was most obvious from my travels is that the Smart Home technology space is definitely *busy* - in an exciting way.  I say exciting, as I’ve been involved in Smart Home technology for about 20 years (via my family company AMCO, which specialises in alarm monitoring) and the rate of innovation and disruption in the space over the last few years has been impressive compared to the years before.  Like much technology, this disruption has been driven by the proliferation of smartphones, increase in broadband power and the shift away from home ownership to renting.

From my various conversations in San Francisco, here are the main insights I took away:

  • The platform / device divide: as with most evolving technology spaces (e.g. the mobile space), Smart Home technology has evolved into a mix of platforms and devices.  So as with mobile where we have platforms like iOS and Android and a giant mix of apps that sit on top of these platforms, with Smart Home technology you have a split between Smart Home platforms (e.g. Amazon’s Alexa, Google’s OnHub, Apple’s HomeKit, British Gas’ Hive) along with a myriad of devices that are designed to work on top of these platforms (e.g. Nest’s smoke detector, August’s smart locks and Zuli smart plugs).  
Image of the first Zuli Smart Plug

Image of the first Zuli Smart Plug

  • The market’s still really early & fragmented: the difference between mobile tech and Smart Home tech is that the Smart Home space is still really immature.  A reflection of this is the multitude of different platforms (you can easily count 20 without trying) compared to the evolved space of mobile where there are essentially only two (Google’s Android and Apple’s iOS).  The reason for the multitude of Smart Home platforms is the fragmentation due to the history / background of the space, with a range of different companies / markets (e.g. security, energy, entertainment, home commerce) being brought together under this unified Smart Home banner.  The challenge of working in this fragmented space for device makers is to work out which platform to back and build support for your device on, which is tricky when there are so many to pick from.

 

  • Security is the killer for market demand (at the moment): speaking to one of my contacts in San Francisco he flagged up the fact that home security had become the biggest *product market fit* driver for the whole of the Smart Home industry.  The point being that consumers see a real need for home security, but would question the need for automated lights or curtains or entertainment systems.  And if you look at which businesses are attracting the biggest investments and gaining the greatest market traction it’s Smart Home businesses focused on home security like Nest / Canary / Ring.  

 

  • Beware of the power of the stomach: out of the tech gorillas I’m most fascinated by Amazon’s Smart Home play that is separately based around the Dash button and Alexa platform.  Unlike a company like Apple which anchors its products and consumer interaction with the virtual and entertainment world, Amazon’s relationship is mostly in the real / physical-goods world; and its the real world that Smart Home technologies bring the most value to.  With Amazon starting with their Dash buttons, there’s a clear market demand for their simple Smart Home tech driven by consumers’ stomachs (i.e. the need to re-order food - and other products) giving signs that Amazon has a good chance of scaling the first iteration of their Smart Home tech via *stomach-led demand*, highlighting that there are other emerging market needs for Smart Home tech outside of security.
Amazon Dash Button
  • Is *home data* the real battle ground?: Google buying DropCam was a big surprise for me, and one I questioned given the size of the cheque (c.$400 million).  The DropCam investment along with the Nest investment very much makes sense within Google’s data-led business focus, and highlighted the fact that Google is not after your online data but also your home data i.e. they’re not just interested in what you’re doing online, but also what you’re doing offline - in your home.  Home data is also seemingly what Amazon is after; similar to Google, Amazon knows pretty much all your shopping habits online, they now want to extend their tentacles into your home.  Making use / sense of your home data obviously has a whole load of benefits for home-owners, yet there are obvious uncomfortable privacy issues which ride alongside these benefits.

Perhaps the most telling moment of my one week Smart Home technology whirlwind tour, came when sat in San Francisco International airport watching FoxNews play out over the bar TV screens I was curious to see 2 out of the 5 commercials were for Smart Home products (August and Canary).  Whether this was random chance I don’t know, but it certainly reinforced how far Smart Home technology has come in the US market and how it’s no doubt about to scale globally - at speed.  For me and my colleagues at AMCO the question is what to bet on next, and how fast to move; something we’re working on . . .