Carriers Need To Take a Systems Approach To Substantially Lower Water Leak Claims

By Dan Sterling, CEO, and Dan Fink, VP, Operations at Water Hero

Today’s Leak Detection Program’s Aren’t Cutting It.

The first is a requirement for high risk policyholders to adopt leak detection systems or be dropped during the renewal process.  This helps to reduce risk on behalf of the carrier but, in many cases, the policyholder may decide not to keep the policy.

The second is a full system buy-down for the customer and is commonly seen with high net worth insurers. Many times this is offered to policyholders right after they had a water leak or during another interaction with the carrier.

The third is a premium reduction for the policyholder after purchase and is becoming more commonplace among traditional insurers to drive adoption.

Upon analysis of all these programs, we find a set of not so stellar results:

Limited Adoption: Poor marketing and too much paperwork leads to low adoption from those that need it most

Systems Get Unplugged: Poor usability and significant complexity lead to policyholders shutting the system down after a false positive. Obtrusive nature of water sensor-based systems leads to movement or disablement.

Inability to Measure & Verify Results: Lack of internet connectivity and reporting leads to limited understanding of results and mitigated risk.

Leak Detection v2.0 Takes A Full System Approach

 Using water leak claims data from the Insurance Information Institute, carriers need to “ESCROW” $193 annually for the average policy. But treating all policies as average is too general to drive specific insights – breaking them down farther into risk tranches helps to identify those with the highest risk and exposure for water leak claims.  The highest risk tranche typically includes high value homes, seasonal homes, older homes and those that have had a water leak before.

Differentiated Marketing – High Risk Policies Warrant More Effort

Once high-risk policyholders are identified, we can allocate our best marketing efforts to drive adoption among those policyholders.  These include working with agents to develop call lists, circulating customized marketing materials that explain the risk and the installation process, and more. The medium risk tranche can have more standardized marketing materials, such as the tip-in flyer below, to encourage adoption.

The work doesn’t stop after the system is purchased – a “plumbing concierge” program is needed so the installation process is smooth. Plumbers need to talk through installation location, potential settings, and how the system works. Policyholders need to learn the installation details and how to operate the system.

Using the latest tools, we can ensure excellent execution of installation and operation details.  For example, apps like calend.ly ensure that scheduling with the installer, customer and our team is coordinated, easily rescheduled and fit into everyone’s schedule.

Following the installation, a report is sent back to underwriting confirming that the system has been purchased, installed and appropriately set to protect the home. That said, similar to smoke detector issues we’ve seen in the past, policyholders can change WiFi settings and adjust systems after their purchase. We need to ensure that we are on top of tech support issues and understand how customers are using or not using their system.

Ongoing monitoring and reporting coupled with outreach to customers with faulty systems is important to ensure that the investment is worth the time. This is typically done in the form of quarterly reports.

Leak Detection v2.0 – Taking Control of The Full System

Reach out now to Dan Sterling, Founder & CEO, dsterling@waterheroinc.com to learn more about next generation leak detection programs.