Escape of water The Insurance Institute of Manchester Sean Nolan, ACII, Dip CILA, BDMA Ins Tech Head of Escape of Water, General Property
Objectives for the session 1 Understand what is driving increase in Escape of Water claim costs 2 Understand what can be influenced at a claim leve l 3 Identify strategies to reduce claim costs 4 Consider how data analysis might influence decision making 5 Consider long term solutions to the challenge, including technology 2
Escape of water in the UK market – the cost! £2.5m 21% £654m 31% paid by insurers of domestic total cost of increase in last every day property claims escape of water three years 3 3
Not just a UK issue, USA market 98% 14,000 37% $6,965 People in the U.S. experience a Of basements in the U.S. will Of U.S. homeowners reported The average costs of a home water damage emergency at experience some type of water to have suffered losses from water damage insurance claim home or work each day damage during their lifespans water damage $2.5BN The annual costs to insurance companies from water damage in the U.S. 4 Source: www.waterdamagedefense.com
Water loss We reviewed four root causes responsible for water loss . Mechanical damage Freezing/bursting Corrosion Overflow/backup 5
Key aspects isolated and extrapolated Key aspects of the Crawford Escape of Water dataset were isolated and Escape of water: The number one priority trends extrapolated to deepen our understanding of the drivers of rising cost: Type of property – detached Pipe material and Value of damage to kitchens £ /semi-detached / terrace connection type – plastic/ and method of settlement /flat + which floor copper/push fitetc Alternative accommodation Which floor of the building required Age of property by the leak originated from banding – pre 1900 – 1930 / 1940 – 1970 /1980 onwards Type of water – clean – Type of accommodation soil/soil – waste/waste – alternative property/ hotel/cash payment/ Main construction other combinations of building or solutions Number of rooms affected Source of water – Disaster recovery required Type of rooms affected – appliance/mains water/ and if so its value and the i.e. Kitchen/bathroom etc sealant/soil/waste/other method of drying used 6 6
Key factors increasing cost Insurance Market Housing Market Lifestyle Trends Construction Trends 7 7
Housing market New Houses New Houses Housing stock 25% 16 or 76% pre 1979 98% report a defect more defects New Houses Washing Machines Dishwasher 1994 = 18% 27% Timber Framed 1970 = 65% 2016 = 45% 2011 = 97% Growth in multi Student Flats Central Heating occupancy dwellings Domestic Flats 1970 = 30% Residential 2016 = 95% Retirement & Care 8
Construction trends 9 9
Lifestyle trends 10 1 0
Insurance sector trends Customer Process Expectation Insurance Fulfilment Procurement 11
Focus on what we can influence Able to Influence Limited Influence • Procurement Strategy • Housing Market • Loss Adjusting Process • Construction Practices • Recovery from Third Parties • Government Regulations • Fraud Identification • Social and Lifestyle Trends • Underwriting • Customer Expectation Management • Use of Technology 12
13 No single solution – several key factors We understood the drivers and what makes a difference… . Practical training Invest in the Rapid on-site response Strict technical The right people with the right program by national equipment 24/7/365 handling mandate knowledge building contractor Target fraudulent / over In-house drying Line-by-line scoping Recoveries Continual experts for on claims by building monitoring stated claims supplier challenge surveyor of costs
The potential for damage if undetected. Volume and spread Hidden pipework – water loss from pressurized pipes can cause extensive unseen damage Water loss in M 2 Diameter Water loss in litres Per min Per hour Per day Per annum 0.5mm 0.33 20 0.48 175 1.0mm 0.97 58 1.39 507 2.0mm 3.16 190 4.56 1,664 5.0mm 22.30 1,340 32 11,680 Hidden leaks – damage can be extensive if they remain undiscovered = Impacts reserve and drying time! 14
Drying techniques – how wet is wet? Dry Saturated Most materials absorb water Material % moisture % moisture except plastics and metals content content Generic machine made brick 1.04 16.84 Some building materials will ‘Hand thrown’ brick 1.10 17.61 never respond to drying i.e. Lightweight concrete block 1.20 19.10 chipboard and MDF Medium weight concrete block 1.41 17.90 Dense concrete block 0.81 15.18 Common building materials Stranlite block 1.21 19.53 can become super saturated – Thermalite block 2.90 31.69 see table Sand cement screed 1.69 15.53 15
Drying techniques – open or closed? Open drying system Closed drying system Preferred for very old properties Using dehumidification, fans and heat Increase evaporation rate at material surface to draw moisture from material 16
Drying techniques – ‘speed drying’ ‘Direct’ air heaters usually trailer systems where air is heated up to 70 o C+ and ‘pumped’ into wet building ’Indirect’ air heaters air in building heated using either hot water filled heat exchangers, (using trailer mounted boiler) 17
Data analysis and influence decision making Sources of data Public data Claim related data Repair data Environment Agency, land Age & type of property, Line by line record of registry, electoral role, construction, location, repairs across Cenus, satellite and claim history, Cost by thousands of claims mapping, published etc peril / location / type etc 18 1 18 8
Data – what can it tell us? Top 10 skilled hours Top 10 material cost Ownership & registered occupants High level category Total High level category Ranking Value at risk Decorating 6718 Flooring 1 Flooring 3117 Kitchen 2 Local risk factors – flood risk, Plastering Decorating 2517 3 Age , construction type etc Kitchen Plastering 1270 4 Likely costs associated Joinery Joinery 1078 5 source room Tiling Roofing 895 6 Most expensive repair Bathroom Doors 768 7 elements Protections Tiling 576 8 Source location and Electrical Block & Brickwork 453 9 average costs Block & Brickwork Windows 438 10 19 1 19 9
Alternative solutions 20 2 20 0
Example workflow Leveraging innovation and expertise to deliver seamless performance and desired outcome Mitigation is Submission QA completed and VALIDATION (Low Complexity) reviewed by WGL reported back and/or Managers Policyholder is to water desk. Crawford Triage Claim assigned based on Crawford walked through evaluates to water loss Guidelines the YouGoLook complexity and desk app via digital chooses path guidance Insurance Carrier (Mid Complexity) validates final estimate and settles claim Policyholder opts in Notification received Leak prompts water Looker Assigned to to repair. by Crawford call center sensor to trigger alarm perform field data capture notifying Crawford and for desk property owner. (High Complexity) Mitigation company dispatched to loss Field adjuster dispatched
The future Connected Continued upward Increased Technology-enabled homes/internet trend in value and homeworking claims solutions quality of finishes € Changes to Brexit: Labour force Amazon, Google and building regulations dynamics driving other disruptors increased cost
Any questions? www.crawco.co.uk
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