Every new year brings fresh challenges and opportunities forinsurers.

The fast pace of development in consumer technology is aparticularly tricky area with potentially seriousramifications.

New products are hitting the market before we’ve worked out newlaws and regulations to cover them.

For example, as advanced hobby drones continue to take off,there are still lots of questions to answer about what happens inthe event of an accident.

When consumer tech goes wrong, there’s a serious risk of anincrease in claims severity. Few could have predicted thehoverboard fiasco that would result in a major recall of half a million hoverboardsbecause of the risk of fire or explosions. But new productcategories are always something of an unknown. Even fewer couldhave predicted Samsung’s recall of 2.5 million of its GalaxyNote 7 phone for similar reasons. What is that phone worth now?

As 2016 draws to a close, we’re looking forward at some of thetrends we think will have an impact on homeowners in 2017.

(Photo: iStock)

IoT and security

By 2020, there will be more than 20 billion connected thingsworldwide, up from 6.4 billion this year, according to Gartner. In the rush to connect all manner of devicesto the internet and capitalize on the potential benefits of the Internet of Things(IoT), we have forgotten about security. There’s a real lack ofstandards, making it difficult to create secure networks, and fewof these devices have been designed with security in mind. Becausethere’s a learning curve with a lot of new IoT devices, securityshortcuts are taken in the pursuit of convenience.

On the other hand, there’s incredible potential here in thedevelopment of “smart homes.” The ability to issue early alertscould mitigate the risk of damage. A smart home that detects a firecould automatically dial 911 and inform the insurer. More sensorscould be deployed to guard against flooding and other types ofaccidental damage. Products that are simple to use, withoutcompromising on security standards, are the ones to watch.

Related: Hackers are targeting your smartdevices

Amazon's Echo, a digital assistant that can be set up in ahome or office to listen for various requests, such as for a song,a sports score, the weather, or even a book to be read aloud, isshown, Wednesday, July 29, 2015 in New York. The $180 cylindricaldevice is the latest advance in voice-recognition technology that'senabling machines to record snippets of conversation that areanalyzed and stored by companies promising to make their customers'lives better. (AP Photo/Mark Lennihan)

Always-on voice interfaces

As devices like Amazon Echo and Google Home roll into householdsacross the country, we’re entering a new era of voice interactionswith our technology. These new voice interfaces are linkingconsumers directly with the world of machine learning andartificial intelligence (AI).

The devices are basically an internet-connected microphonethat’s constantly listening, sending data back to the home base.While there’s great potential for these devices to help us byanswering questions, keeping us up to date with our schedules, andenabling us to shop easily by voice, there are also serious privacyand data-usage concerns to assuage.

Related: 10 things to do to keep hackers out of yourhome

(Photo: iStock)

Sharing economy

We’ve seen an enormous boom in the sharing economy with serviceslike AirBnB and VRBO, enabling homeowners to make some extra cashby renting out rooms or entire properties. But there’s a growingrealization that appropriate insurance coverage is required.

Liability, when things go wrong, falls on the owner.Commercial-level policies are most likely necessary if homeownerswant to protect their property from temporary renters.

Related: Airbnb: A risky situation for buildingowners

(Photo: iStock)

Marketing to millennials

Mortgage providers need to engage with millennials through digitalchannels to meet their needs and expectations, and to ease theirtransition into the housing market. Home ownership rates in theU.S. have plummeted lately, as seen in the Census Bureau report. Millennials are mostlyrenting now, but as the economy continues to cater to their needs,home buying will grow in this segment.

Carriers need to position themselves now to catch these buyersas they move into owning homes as they age. This largestdemographic will sacrifice cost for speedy convenience. They wantmobile access and tools to manage the buying process online, donein a seamless way, with customer service teams on point, savvy anddeeply integrated with their own customer-facing software. Theywant to be catered to right out of the gate as though it weresecond nature.

Related: Claims adjusting in the 21st Century: What's insidea millennial home?

(Photo: iStock)

Tiny home trends

The fall in home ownership, coupled with high rates of debt formillennials, is giving rise to the tiny home trend. To make housingmore affordable, we’re seeing home sizes shrinking to 1,000 squarefeet or less. We expect this trend to continue beyond 2017 aslandlords focus on millennial renters.

(Photo: Shutterstock)

Advancements in AI

Artificial intelligence is improving rapidly and it’s set to changethe way we interact with companies. We’ve already mentioned voiceinteractions through devices like Amazon Echo, but you can alsoexpect to see more chatbots crop up on Facebook Messenger.

Already Bank of America and retailers like Macy’s areusing chatbots on the frontlines of customer service. Similar tolive website chat services, these chatbots are usually set up toperform repetitive tasks or answer the most commonly-asked customerquestions. Hand-offs to human operators will be based on a kind oftriage system, triggered when a chatbot is unable to deal with aquery. All carriers should be looking at how to leverage AI to bemore responsive to customer needs.

(Photo: iStock)

Virtual Reality (VR)/Augmented Reality(AR)

The potential applications for virtual and augmented reality areendless. It’s not just about gaming. Through a VR headset, peoplecan attend events or visit places of fantasy, and AR can enhancethe world around us. Google’s ProjectTango and Microsoft’s HoloLens are set to have a big impact.Tango-enabled devices aimed at the consumer market can guide you toyour seat in a busy stadium or help you find your friends in acrowd. HoloLens is more focused on creating holograms that help youto interact with or understand your environment in new ways.

There’s also enormous potential for insurance jobs training.While VR immerses you in another, virtual world, AR enables you tooverlay data on the real world. Auto body shops could train in VRsimulations; mechanics could get schematics of an engine with partslabelled via AR. Likewise, a claims professional could see therelative worth of homeowner contents, item by item in real timeduring a property loss assessment, or share a live tour of thehouse with a partner or the carrier.

It will be interesting to see how these trends will pan out andwhat their impact will be on homeowners insurance in the comingyear.

Related: Home automation: Gains in efficiency but risks areuncertain

Joseph Bracken is vice president, product management forEnservio, a leading provider ofcontents claim management software, payments solutions, inventoryand valuation services for property insurers. He can be reached [email protected].