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Iris Up After Failure

Insurance Company Participation in Smart Home Market Raises Liability Questions

Following Allstate, Liberty Mutual and State Farm by a couple of years, Travelers is the latest home insurance company to tag homeowner policy discounts to smart home products. “We’re interested in learning as much as we can about smart home technology and how it may be able to protect people and also property,” Greg Jacobs, Travelers managing director-telematics product strategy, told us by phone.

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Travelers installed smart home products at its Claim University facility in Windsor, Connecticut, where it’s testing them and training and educating claims personnel about how the technology could affect claims. Travelers is still using and testing different systems, Jacobs said, and results aren’t available to share. Jacobs wouldn’t disclose particular manufacturers the insurer is working with due to "the speed with which new technologies are coming to market."

Instead of qualifying certain devices or manufacturers, “we decided to provide discounts for any devices that meet our definition of what would qualify,” Jacobs said. The definition of what qualifies for a discount is any system that uses a smart device to provide notification of a fire or theft occurring. “If it notifies your smartphone, watch, tablet, etc., that a fire or theft is happening,” he said. "A smart smoke detector would qualify for fire, and a device that detects theft through other sensors or cameras and provides an alert would also qualify” for a discount on a homeowner’s insurance policy, he said.

Smart home products that wouldn’t count toward a discount are video-monitored doorbells, environmental thermostat controls or lighting controls, Jacobs said. The Travelers’ website tells consumers Protective Device Discounts apply to devices including smoke detectors and alarms; interior sprinkler systems; home security systems such as dead bolts, alarms and 24-hour security guards; and “smart or connected home technology which alerts the customer that a fire or burglar event is occurring.” There’s no one-size-fits-all discount. Premiums vary by state depending on the particular risks homeowners are exposed to, said Jacobs, citing wind, fire and theft as separately weighted risks.

Jacobs acknowledged the potential of cyber hacking occurring with connected home devices and said he couldn’t comment on hypothetical claim scenarios when we asked how a breached network might affect a claim or discount.

We asked about a situation such as the one Lowe’s experienced last week when an outage hit its Iris Next Generation smart home platform. Travelers isn't one of the insurance partners listed on the Iris partner page (Lowe's partners are Allstate, Liberty Mutual and State Farm), but in such a situation, Jacobs said an outage that affected a smart home platform “would not affect [homeowners'] policy or their discount, and we can’t comment on the liability of it.”

At Lowe’s, “the Iris team is dedicated to resolving any lingering issues users may be experiencing following the outage experienced on March 8th,” the company website said. The cause of the outage was a “database failure due to a process issue,” the company said. The failure occurred at roughly 3 p.m. EST March 8 and the database was restored from information backed up through March 7 at 10 a.m. EST, Iris said. The restoration process was complete by about 4 p.m. EST on March 8, it said.

A spokeswoman for Iris told us the company has put in place "new approvals and stopgaps to keep that from ever happening in the future, but everything is back up and running, and devices have been restored." Iris sent an email to customers saying there was a "database failure due to human error in a process" and the database has been corrected and restored and backed up through March 7, the spokeswoman said.

Any changes made to customers’ Iris systems from 10 a.m. March 7 to 4 p.m. March 8 were lost, the company said on the website. Those changes included added devices, new or changed rules, and settings changes made to services such as security. Iris worked to “restore any accounts which were added or migrated in this time frame along with corresponding hub and device information,” it said. Restoration was possible only for accounts “which haven’t been re-created by the user since the outage,” it said. Users who added or modified a device, rule or scene -- or made another setting change -- during the affected period had to manually recreate changes, it said.

The Iris spokeswoman said liability resulting from the outage would depend on individual insurance company policies.