Insurance Innovation of The Month: Water leak prevention for high net worth properties

Ninety’s “Insurance Innovations of the Month” feature contains regular snapshots of real and recent insurance innovations, based on conversations with the innovators behind them. They are drawn from anywhere in the world, and from all categories of insurance. If you’ve got an innovation you’d like to highlight, drop us a line at ninetymarketing@ninety.com.

• Insurer(s): Hiscox
• Market(s): UK
• Insurance type(s): Home insurance

Problem

Escape of water (EoW) claims are increasing across the whole industry. For Hiscox, in particular, as a high net worth (HNW) insurer, those claims can be particularly large and complex. Clients often have £100k kitchens and under-floor heating, so the average repair & drying process can be lengthy and disruptive. For Hiscox, the question was how to help end clients avoid the pain of leaks happening in the first place, but also mitigating those high claims costs, helping bring down premiums for clients over time.  For their brokers, the question was how to give them something new and different, to go back out to clients to speak about as a point of difference.

Solution

Hiscox looked at the market, and considered a range of options. Ultimately, they settled on the Leakbot device. Hiscox considered various business models, including whether they could charge clients for the device, and whether an engineer service could be included or not. 

 They started with a small staff trial, which flushed out some issues. After that, they ran a small-scale client pilot for a little over a year, gathering data, client feedback, and real-world engineer reports on real in-the-home leaks. Through that process, they worked with Leakbot to ensure that the specialist engineering team that responded to leak alerts delivered an experience was appropriate for the expectations of their client base. 

 Through the pilot, Hiscox tracked client response, engineer findings, self-installation feedback, and more. Their claims team looked at the reports from engineer visits and estimated what the losses would have been if the leak had continued undetected. This built the underlying commercial model that allowed Hiscox to take the pilot to a scaled market offer. 

 The Hiscox offer, launched in Feb 2020, is available to all Hiscox clients with buildings insurance. It provides them with a free Leakbot device (retailed at £149). This is easily self-installed, and syncs to an app on the client’s phone. If a leak alert is triggered, Hiscox pays for a specialist engineer visit, who will find the source of the leak and repair it, leaving the client’s home leak-free. 

Outcomes 

At the time of writing, the offer had just launched, and so scaled outcomes are yet to come in. However, through the year-long pilot, Hiscox measured NPS of engineer visits, ease of install, quality of client experience, etc. They captured all data in terms of promotion response rates, Leakbot take-up, install volumes, leak alerts numbers, engineer visits, leaks fixed, etc. The expected claims savings were calculated from the pilot data, and showed significant ROI just in claims. Beyond that, Hiscox are tracking other potential benefits such as improvements in client retention, conversion and are seeing some good anecdotal examples of brokers using the offer to get new business over the line.

Time will tell what results will flow from the scaled market proposition, but in an insurance world where IoT / smart home applications have oft been sought to deal with EoW claims, we’re glad to see this entering the market.

Social impact

As a social, for-purpose business ourselves, Ninety is always looking for the social, human or environmental impact of new ideas in insurance. Here, the impact is clear: it’s the fundamental social purpose of insurance. Protecting people from disaster, and – in this home insurance context – keeping clients warm and dry in their own homes. We like, too, that it helps reduce premium inflation, and keeps insurance more affordable.

Tips to other innovators

• Don’t underestimate the power of a few good stories. A lot of the final buy-in for rollout came from the stories that they got from pilot: the engineer reports, the real customer stories about how it had helped, and the big claims they’d potentially saved. That was probably more powerful than the 1,000 row Excel model that set out the financial case.
• Be honest about the challenges. Early versions of the tech used a cellular network called Sigfox, which had coverage issues and struggled through staff pilots. Being honest about that, and being willing to press the pause button for a while, maintained the credibility of the pilot, and allowed the tech to catch up with a WiFi enabled device that solved the issues.

Categorization for insurance innovation portfolio planning: 

Ninety Ten Big Ideas: this is an example of Ninety’s “Intelligent Risks” and “Risk Prevention” Big Ideas.

Ninety Ten Types of Insurance Innovation: this innovation combines the following Ten Types categories – 1) Operations & Claims, 2) Added-Value Services, 3) Customer Experience, and 4) Brand & Marketing.