The Hartford has been writing insurance policies for US businesses and consumers for more than 200 years. In 2018, the company launched an Internet of Things (IoT) Innovation Lab, focused on using technology like water and humidity sensors to collect data and detect and prevent costly losses from incidents like water leaks and pipe bursts.
Dan Campany, Head of Risk Engineering, and Bobbie Schaefer, Director of the IoT Innovation Lab, spoke with InnoLead about how the program got off the ground, and the customer-centric experimentation that has helped make it successful in averting what’s estimated at millions of dollars in property damage.
Our Roles
Dan Campany: I’ve been here 21 years, and I lead our Risk Control Services Division, working directly with our customers to mitigate exposures and risks and prevent claims from happening in the first place. IoT, which I led for the prior five years, is a core component of how we think about that.
Bobbie Schaefer: I’ve been with The Hartford for 20 years, and I’m currently part of Dan’s team. We’ve been working together for the last few years, dedicated to IoT devices. My role is on the new product development and client solution sides, working directly with our customers to focus on their business needs so we can help connect them to the right risk management solutions.
The Project
DC: We started working in IoT about six years ago, because the organization recognized it was an emerging technology that was going to be very relevant in our business. At the same time, we recognized that the majority of insurance claims are in some form predictable or preventable, and the best claim is a claim that doesn’t happen. It’s a win-win for the customer and The Hartford.
With IoT technology, we can understand risk more granularly than we can before, and we can understand it in real time, which allows us to do things like real-time alerts of, “Hey, there’s water leaking into your basement or your HVAC room. Go turn off the main valve so you can avoid a worse situation.”
We have, in the course of that, proven IoT is very successful for water damage prevention. We also have experimentation in other areas like worker safety and fleet telematics, a quickly growing program for us.
How It Got Green-Lit
DC: The program initially got started when our construction and business risk area was seeing a rash of claims as a result of water damage and came to us asking for help. We started with experimentation there, and when we were successful, we expanded to other areas—what we call fixed property, like office buildings, schools, hospitals, etc.
When we’re experimenting early on, when the technology is unproven, we feel it’s incumbent on us to pay for the technology.
Dan Campany, The Hartford
When we’re experimenting early on, when the technology is unproven, we feel it’s incumbent on us to pay for the technology. And when we’re more mature in our thinking and our use case and the benefits, the philosophy we have is the funding for the solution should be appropriate and proportionate to where the benefits accrue, so some of that’s to The Hartford, some of that’s to the customer.
And, of course, we deal with state regulations. We take regulation, compliance, and data privacy all very seriously. We meet with our lawyers and compliance people every single month and we run through what we’re doing and get them to react and debate. That’s something we take very seriously, so we’ve been hand-in-glove with them as we’ve worked through these programs over the years.
The Smartest Thing We Did to Set It Up for a Successful Launch
BS: Our experimentation approach was really customer-centric. We were able to work with a number of different types of devices and work directly with the customer to understand what works and what they needed. We learned very quickly that customers really valued that approach. We also learned very quickly that it’s not a one size fits all. There may be different types of solutions for different customers, so understanding that and getting that customer feedback really helped to kick off the program.
Sometimes it wasn’t only loss prevention that was important, but water conservation as well, so really understanding and tailoring those solutions, we were able to move from experimentation to actually proving that the technology was successful in avoiding losses and had a great return on investment. Another thing we learned was that our customers valued non-invasive technology, where they didn’t have to cut into pipes or do additional plumbing. There are great options out there to monitor flow within pipes and shut off valves, but especially early on, our customers just valued devices to strategically place around the property so that teams get notified early.
And we installed a lot of this technology in our own buildings, recognizing the importance that we can set these programs up for success and be an example for our customers.
It’s really about that education up front. A lot of customers didn’t know about this particular technology when we started talking about it five years ago, but helping our customers understand what the sensors did and didn’t do, and helping them set it up, also helped us implement it with more customers as we learned. And as customers experienced those avoided loss situations where they could respond early and take action, that was really helpful in telling the story to other customers and using those real-life use cases to continue to evolve the program.
We needed to meet the customer expectations and the business unit expectations at the same time…
Dan Campany, The Hartford
DC: Having a dedicated team with a diverse skillset was mission critical. What we looked for when we hired was breadth of skillset and breadth of experience. Sales strategy, data, technology — we had a good mix of all those things, and the diversity was critical for us to come around and solve those customer problems and be creative and do experiments.
And the third thing was working with our business unit partners to solve problems that were also problems of theirs, to help them perform better against their objectives from an underwriting perspective in conjunction with their strategy. We needed to meet the customer expectations and the business unit expectations at the same time, and so balancing those and being able to find the win-wins was what was ultimately critical to our success.
The Three Biggest Challenges
BS: I think the initial challenge is educating customers about the technology and helping them get more comfortable. And then as people get more comfortable, and as we’ve had more stories of successes and the technology became well known, adoption increased further.
Number two is staying current. There are new things coming out every day, and it’s a challenge, but also an opportunity, to basically stay on top of that, having a dedicated team that can really be focused on that full time.
And also understanding that what works for one customer may not work for another customer. So having experts that can consult with the customer to identify the right solution is another thing we’re able to keep on top of.
DC: This experimentation with IoT cannot be a side project. It has to be a full-time job for a dedicated team, because when it’s a side project, it always gets pushed to the near-term priorities.
The other big challenge was getting the right balance — the right number and placement of sensors to maximize the benefit for The Hartford and the customer, without overspending and over-sensoring the customers. The science of getting that exactly right is one of the things that took time to work through, and that’s sort of the differentiators between those that do this well and those that just do this.
Metrics We’re Tracking
BS: Number one is customer feedback. We like to continue to check in with our customers to understand the successes they’re getting with the systems and any kind of recommendations for improvement.
And the number of customers installing this technology is also a key metric — we expect these types of programs to continue to grow.
DC: And as we’ve gotten more scale in the program, more sensors installed and more time with sensors installed, we can now compare the book of business with sensors with the book of business without, and start to get quantifiable validation of the business case and the return on investment, which is very positive.
