Escape of water claims continue to exercise property claims managers. According to the most recent estimates from Association of British Insurers, domestic escape of water claims cost insurers £483m. With this in mind, Post, in conjunction with Acumen, invited industry experts to discuss how insurers can seek to manage day-to-day costs of these claims and what role can technology play in controlling leakage
What factors are driving the increase in frequency and indemnity spend on escape of water claims?
Keith Maxwell, head of technical home claims, RSA: One of the main drivers is the change in customer behaviour. Customers now have different lifestyles, they go out more often and spend longer out of their homes. Another factor is the introduction of pressurised boilers, which can see water escape along with the pressure. There are quite a number of factors increasing the escape of water claims.
Martin Ashfield, claims technical director, Axa: It is also the distribution supply chain. The customer discovers the leak and you eventually get to know about it but it needs to get through the all the stages first, like detection and notification, but by the time it gets to you it can be too late. In the US they have teams available 24/7 so you can know about the leak within hours.
Graham Brogden, head of technical, Aviva: There are still a lot of water tanks at the top of the buildings, and there is not enough supervision, and if those tanks break, it can result in damage to the whole building because the leak is not discovered early enough.
Darren Francis, operations director, Acumen: An increase in high-rise accommodations is another factor. With high-rise accommodations in the case of a single escape of water incident, you don’t have one unit damaged but possibly three or four, leading to complex and expensive claims.
How can insurers ensure the repair costs are kept to a minimum?
Jon Bird, best practice specialist – property, NFU Mutual: First we need to know who is managing and controlling the costs of repair and look at any opportunity to lower them. We need to attempt to prevent accidents from happening by educating customers, but also use technology post-incident to reduce the life cycle of the claim and improve customer’s choice.
Ashfield: When surveying the buildings you assume that every property in the building is similar so you do not survey every property individually, but the finish and materials used in these properties can be very different. The finish and the cost of materials used can significantly affect the repair costs.
Ian Davies, UK head of personal lines, AIG: A lot of insurers now use a third party to help fill in the gaps about the property instead of sending someone in to investigate or asking customer additional questions. Third parties like estate agencies often already have reliable information on hand and can share these with the insurer.
What does good look like in terms of resolving escape of water claims?
Colin Herrington, head of claims, Plum Underwriting: It is a very process driven environment, but insurers need to think ‘what is the best method for this type of leak’, ‘is stripping down really the best method?’. Back in the day, a senior loss adjuster would pass down their knowledge and expertise, this is not necessarily the case any more and often the loss adjuster settles for the easiest method.
Nick Lock, head of property claims, Allianz: Last year to tackle these problems we started using a video solution with Crawford and Company. We would send someone to examine the situation and record the video, this not only speeds up the process and reduces the number of touch points, but allows us to decide on the best solution and the steps to take next.
Stephen Walker, director of claims customer delivery and operations, Covéa: If you use digital imagery and combine it with technology, you can reduce the cost of the claims, but also increase the value of the service. It eliminates the need for you to run around the site and pay experts for the vision of what needs to be done.
How easy is it to manage the escape of water indemnity spend while not compromising on the claims settlement?
Sarah Cox, technical property claims manager, Ecclesiastical: It depends on the type of the building. If you look at some commercial buildings and residential buildings, the decision you make when it comes to repair and costs is unbelievably different. With every claim, you need to weigh the options, and figure out what the best course of action is for the damage you are facing.
Lee Millward, senior home claims manager, Co-operative: For me, it is a multi-challenge. It is about getting there as early as possible and not just going through the process. Technology can help avoid big claims by discovering them in time. When I first started in the industry, we just fixed it but now we use copper as a modern solution because you can see a discolouring on the pipes, for example, which could imply a leak.
Noel Summerfield, head of household, Admiral: The most important thing going forwards is triaging the claim effectively; identifying the type and size of claim adequately at first notification of loss and then ensuring that the right resource is sent to the property as quickly as possible.
How can you ensure the claims are reported quickly enough?
Charles Bush, head of property and energy claims, Zurich: You need to educate your customers. If you can get a customer to report the leak within the first half an hour of discovering it, the change in the size of claim is dramatic in comparison to reporting it two hours after the discovery. We need to ensure the customer does not leave a damp patch for months. We need to encourage them to notify us of it as soon as possible.
Ian Marsh, head of technical claims, Saga Group/Acromas: Customers also need to fully understand to turn the water off when going away. We have noticed that a lot of customers were not doing that so we printed out flyers to educate and encourage them to turn the water off when going away to prevent the escape of water.
What role could technology play in risk managing escape of water claims to prevent them or at least reduce the cost?
Bush: Solutions like leak detection technology can come in very inexpensive, especially compared to the cost of the repair if the leak is not discovered. While escape of water is a big issue in unoccupied properties, incidents still happen in occupied properties because customers do not report the leak when it is discovered, and this is where the technology can fill in the gaps.
Reza Mofidi, managing director, Acumen: The problem with this type of technology is, if you do not turn on the holiday mode, it will not know that you are away and it will not turn the water supply off. Technology still works on the volume, and while it might work for the commercial businesses it does not necessarily work for residential properties.
Cox: This technology does not necessarily fit with every system and customers also do not always know what system they have installed and how their pipes are built. It is important that this information is available to them so they know where to look for the leaks.
What level of fraud are insurers seeing in relation to escape of water claims?
Lock: I have heard of instances of people faking claims. They reported a leakage but the surrounding areas were dry. There are instances where people manufacture the claims and exaggerate how bad the damage is.
Davies: Fraud is not as much of a problem, as customers not acting on a leak. We see more instances where customers do not react quick enough or at all. By not acting they are allowing the damage to spread and that is a bigger issue.