Only hours after leaving for vacation, a homeowner saw anunexpected message flash across her smartphone: "Interiortemperature high, smoke detected…contacting fire department." Itmade for a brief vacation, but the notification may have saved ahouse. In this hypothetical scenario, sensors installed in aconnected home recorded an oven's malfunction and a rapid change intemperature before transmitting the information to authorities whocould help.

In the real world, connected residences stream reports aboutsecurity, temperature, air quality, moisture, noise and otherconditions, opening a new window for insurers into a trove ofdata. In North America, where an estimated 6% of homes havebeen connected, the trend toward joining the "Internet of Things" is expected to grow to amarket penetration of 28% by 2019, according to the market researchfirm Berg Insight. Widespread adoption of smartphones and tabletsis making the idea of remote monitoring of home conditions an easyand appealing prospect for consumers anticipating a better, andperhaps safer, quality of life.

Among insurers, opportunities for insights from connecteddevices will likely be enormous, even though using those devicesintroduces several challenges. Millions of devices sendingcontinuous streams of information may soon lead to unscalablemountains of data. Questions remain about how best to structurethat data and how to calibrate information provided by differenttechnology providers. Policyholders also raised issues of privacyand the illicit sharing of information, and insurers surely will betasked to show that home devices are secure and accurate in theirtransmissions.

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