December 03, 2013

In the latest sign that the smart device revolution is poised to shake up the insurance industry, State Farm has announced a partnership with home security company ADT to provide the latter's home-monitoring technology, ADT Pulse, to State Farm policyholders at a discount.

An insurer identifying a third party whose services complement insurance and offering a discount to policyholders is not a new strategy in the industry. But when it happens, it serves as a bellwether to find out where insurers see the industry going in the near term. In the past year, USAA has patented some home-monitoring technology, and Hartford Steam Boiler has partnered with a company that provides energy-use monitoring technology as a way to offer home equipment breakdown coverage.

"ADT Pulse's remote access capabilities allow State Farm customers to view real time video of their premises; manage their energy consumption by controlling thermostats, small appliances and lights; and receive notifications and alerts via phone, email or text," the companies wrote in a statement.

State Farm has not announced any intentions to access or use that data in its insurance practices, and it's unlikely such an announcement is coming soon. However, homeowners who do install the technology may be eligible for discounts, the statement notes; a similar arrangement to how telematics-powered usage-based insurance works in the US.

The technology is still nascent and the public is growing increasingly wary of monitoring in their digital lives. But that hasn't stopped them from adopting these kinds of technologies in significant numbers. Can insurers find the right tone and offering to capitalize?

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, ...