Insurers have been slow to incorporate smart home devices into home insurance policies despite their ability to reduce the number and severity of claims. Only a small proportion of households have a smart water leak detection device installed, but Internet of Things solution provider Ondo Insurtech (formerly LeakBot) has plans to scale its product as it goes public.
According to GlobalData’s 2021 UK Insurance Consumer Survey, just 6.7% of home insurance policyholders have a water leak detection device installed in their property. Besides weather events, the main claims areas in the UK’s home insurance market are escape of water, fire, and theft. Our survey shows that of the 13.8% of policyholders who had made a claim, 19.2% related to a water leak or a burst pipe, highlighting the significance of this type of claim to insurers. It, thus, makes sense to develop smart home policies focusing on preventing claims against burdensome perils such as escape of water.
Following the recent acquisition of LeakBot by Spinnaker Acquisitions, the insurtech solution provider is set to rebrand as Ondo Insurtech and go public. Ondo is set to expand its reach, as well as make product enhancements, with funds raised from the stock market listing.
While smart devices such as water leak detectors can identify issues before they escalate, and hence reduce the severity of claims, the number of players offering such policies remains limited. In the UK, providers such as Hiscox and Direct Line, who do offer policies incorporating a smart water leak detector, target high-net-worth (HNW) individuals rather than the mass market. Insurers have typically provided smart water leak devices free of cost, but the relatively high cost of the devices and the premium rate of home policies have limited them to the HNW market. These insurers had partnered with LeakBot to offer these policies, while the insurtech also has partnerships with leading providers in other geographies including the US, Ireland, and Scandinavia.
Given the benefits of the smart home insurance policies, their slow rollout indicates that the industry is finding it challenging to effectively leverage real-time data from smart home devices into policies. But as insurers increasingly place more focus on preventative solutions and move away from merely paying out claims, Ondo’s product will become even more attractive, particularly once it has gone public and used funds to improve its product.