Sometimes the most significant risks are the most prosaic. When we think about home insurance, we think about burglary, storms and fire more than leaky pipes, and yet escape of water is a huge and increasing problem, which is responsible for around a quarter of all home insurance claims (around £650m a year). The cause is almost always poor workmanship – and yet the problem is difficult to address, because by the time the problem becomes apparent, it is too late to make sure the individual who is responsible carries the cost.

However, this risk is now manageable. Whilst reality often falls short of hype when it comes to new technology, innovation around leak detection and mitigation is now at a point when insurers and consumers can address this risk decisively.

For example, the tech company Geo, along with the property underwriting agency inet3, have thrown down the gauntlet by launching a product that not only detects leaks and sends warnings to your phone, but automatically shuts off the water supply to prevent catastrophic damage.

It is practically inevitable that as these products prove their worth, the reduction in risk will feed through to costs premiums for better-prepared consumers. The real question is, how can insurers use this opportunity to build better relationships with their customers?

We all know the example of Vitality, which has encouraged its customers to prevent risks by rewarding them for having a healthier lifestyle. We also know that with telematics, insurers have made the roads demonstrably safer by insisting on black boxes for higher risk drivers. Yet with telematics, consumers often still feel forced to change their behaviour while only seeing marginal improvements in the deal they are getting, while Vitality customers are much more likely to feel good about the deal they are getting and recommend it to others.
Insurers can play a part in reducing the cost of claims, using relatively simple technology. The challenge is doing so in a way that makes customers feel that they are in control of
a process that leaves them significantly better off.

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