Effects of smart home technologies on homeowners insurance—market, product design and willingness-to-pay

Abstract

This paper examines the impact of smart home technologies on householders’ and homeowners’ comprehensive insurance. To this end, providers and products on the German smart home market, which has developed strongly, are analysed. By means of a conjoint analysis and a survey according to the van Westendorp method, it is empirically derived how insurance companies should design customer-oriented smart home products. The result is that policyholders use the field of application (burglary protection, fire alarm system, and water detector), the discount and the type of installation as decision parameters for choosing a smart home tariff. Furthermore, the topic of data privacy of policyholders is given high priority in the design of insurance contracts in the smart home area. Insured persons expect a relatively high monetary counter value for the provision of their data. Insurance companies can counter this by designing transparent and service-oriented offers as integrated service providers and generate new business models from the growing trend of smart home technologies.