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The specialist insurer has teamed up with UK-based insurtech LeakBot to leverage the latter's leak detection system, according to Fintech Finance. It's the first UK insurer to offer LeakBot's services to all of its new and existing building insurance customers for free. LeakBot's other clients include Aviva, insurtech Neos, and RSA Group.
Here's what LeakBot's solution looks like and how it will help Hiscox:
- LeakBot has developed an end-to-end claims mitigation system that aims to tackle water damage claims within a home. It uses an IoT device that leverages Thermi-Q technology to detect water leaks and doesn't require professional installation. The technology measures the air and water temperature in a user's home, which will drop if a leak occurs that draws in colder water from outside the home. The device connects to the wireless network within a user's home and notifies the customer via a smartphone alert when it detects a leak. It also provides access to LeakBot's team of engineers, who arrange a visit to find and fix the issue.
- Water claims are a big burden for home insurers, and using IoT can help reduce those costs. Insurers in the US and the UK spend around $16 billion a year on leaks, per LeakBot. A majority of leaks are small and hidden, causing damage over a period of time, and are therefore largely mitigated if detected early on. Using LeakBot's technology can help Hiscox detect such issues for its customers early and limit losses connected to the incidents.
IoT devices have the power to reduce the number of claims insurers have to pay out, and adopting such solutions can help with customer retention. IoT has emerged within most lines of insurance, including devices that track driving behavior for auto insurance and fitness trackers like Fitbit that incentivize a healthy lifestyle within health insurance.
By 2025, there will be an estimated 50 billion connected devices in circulation, up from just 12.5 billion in 2010, per McKinsey. And while only 26% of US broadband households owned a smart home device in 2017, 50% of respondents reported that they planned to buy one in the next 12 months, per research from Parks Associates.
The same research revealed that 40% of consumers would switch insurance providers to obtain smart home products, with 60% of respondents saying they choose premium discounts over other types of incentives when buying smart home products. Hence, insurers looking to increase customer satisfaction should look into implementing IoT devices within their offerings to meet these demands and to reduce the number or size of claims made, which can enable them to offer some users cheaper policies in turn.
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