Pepper IoT, a company that provides applications and back-end services for other businesses to build IoT platforms or devices, has acquired Notion, a company that provides insurance companies services and sensors designed to mitigate claims. Financial terms of the deal were not disclosed, but it’s a surprising acquisition in part because Pepper acquired Notion from Comcast, which itself purchased Notion back in February 2020.
It wasn’t a rethinking brought about by the pandemic that prompted Pepper to inquire about purchasing Notion, but the recent deal between ADT and State Farm, in which State Farm invested $1.2 billion into ADT taking a 15 percent stake in the security company. Scott Ford, the CEO of Pepper, said that when that deal happened, he heard from many smaller insurance companies that were suddenly concerned that they needed their own smart home insurance offering.
Vivint, another security company is also making inroads into insurance with plans to eventually create and sell insurance products. The combination of smart homes, security companies, and insurance providers has been brewing for years. As far back as 2017, I talked to the then-CEO of Notion about how security firms could work with Notion to layer monitored security on top of Notion’s existing sensors. At that time Notion was already working with a few insurance companies who marketed Notion’s sensors to their customers and offered premium discounts when customers installed them.
After the Comcast acquisition, Notion continued to sign more insurance customers, but Ford said that Comcast realized that insurance wasn’t a core initiative and that Notion would need a partner like Pepper to really thrive in the market.
It has also taken time. While I used to envision smart home gear subsidized by insurance firms who built policies tied to if a user’s alarm was consistently turned on when they left, the insurance world stuck pretty close to the model of simply offering discounts on premiums if users installed certain devices.
Insurance is a conservative business, and it is only in this last year that we’ve seen the creation of new roles at ADT and Vivint dedicated to researching insurance products tied to home monitoring and smart home systems. We’ll see more and more options roll out on this front in the next few years as actuarial data piles up, and insurers can justify the investment in smart home platforms and plans.
And this is the wave that Ford wants to capitalize on. Pepper has been providing some form of IoT services for almost the last decade. Earlier iterations from the company designed a smart home platform for Best Buy and have provided back-end cloud and apps for device makers. It competes with Tuya and Ayla most closely.
With the acquisition of Notion, Pepper will be getting into the insurance vertical although Ford hopes to also find customers in the energy management vertical, which he sees as becoming more significant, especially in the wake of NRG buying Vivint. And for those insurance customers who have existing relationships with Notion, Ford says the platform options will expand. For example, adding video becomes possible with the Pepper platform.
As we head into 2023 mired in economic uncertainty, I expect we’re going to see a lot more deals for smart home services and devices. This is an interesting one, but it’s probably only the first of many.