Where does Security Fit in the Connected Home?

Consumer devices and products are more connected than ever before, from health and fitness monitors such as Fitbit to wearable technology such as the upcoming Apple Watch. The connected home is another technology trend, where sensors, smart appliances and even thermostats communicate with one another and their owners – it’s all part of the Internet of Things, where increasingly more devices have smart, connected technology. In the consumer market’s enthusiasm to embrace such connectivity, however, it may overlook some crucial concerns. Where exactly does security fit in the connected home?

The consequences of hacking the connected home range from comical to catastrophic. Pranksters may enjoy activating or deactivating your lights and appliances as a joke, but there are opportunities for more sinister activities as well. Electronic door locks may be compromised, granting access to burglars. That internet-ready toy bunny, equipped with a video camera, could be hijacked and turned into a surveillance device. Access to your home’s wireless signal could lead to data and identity theft.

Even devices that are not connected to the internet may be vulnerable, such as alarm systems that rely on radio signals to communicate with individual sensors.

And yet, the push to connect homes to the Internet of Things proceeds, and it is not difficult to see why, especially from an insurance perspective. Sensors can provide active, real-time data on moisture levels and whether or not a pipe is leaking, so owners can react more quickly to prevent or minimize loss. Home security systems can alert owners if a door has been left open for too long, prompting them to close it and prevent burglary.

The home security market in North America is set to be worth $14.1 billion U.S. by 2018, an 11.5% increase over its 2014 value, and not least because many insurers reward customers with lower rates if they install smart technology. The insurance industry is actively involved in connected homes, with even the Canadian Underwriters Laboratory offering to certify various monitoring products.

With significant risk reduction on one hand and new, worrisome risk exposure on the other, what is the safest course? Brokers can advise their customers of some basic security principles, including:

• Set long, difficult passwords for network signals and each individual connected device
• Devices that connect via Bluetooth are less susceptible to hacking than those using radio or Wi-Fi signals
• Check manufacturer websites for your connected products regularly and install software updates, which may contain security patches, right away

Brokers, for their part, should regularly update themselves on the risks of smart technology to better advise and protect their clients.

What are your thoughts on the connected home and insurance risk? Share them on the CSIO eXchange discussion forum and see what others in the industry have to say.