Insurers want homes to smarten up

● If geysers could talk, they might just prevent the damage and losses suffered when they burst.

In the ever more connected world, shortterm insurers are exploring how sensors could give geysers and other appliances a voice to mitigate risk.

“The Internet of Things [IoT] is probably the biggest disrupter we have seen in insurance,” Andrew Coutts, Santam’s head of intermediated business, said this week.

Though geysers themselves are not prohibitively expensive to replace, the ruined carpets and furniture that result when they fail are a growing headache for insurers.

Technology such as leak detectors on geysers can identify problems with a unit long before disaster strikes, Coutts said.

Insurers are now piling in with research and are trying to persuade the developers of new properties to include IoT devices to manage risk from the start.

But clients themselves are usually not enthusiastic about paying for extras such as water pressure monitoring and electricity supply management. The industry will probably tackle the issue in the same way it did car insurance — vehicle trackers and telematics are now common and often have cost benefits for clients.

“We do think we can fund [IoT in homes] through premium reduction,” said Coutts.

And there are clear benefits for shortterm insurers, because the technology can cut the number of claims, he said.

But the entire risk landscape is changing, according to the results of an industry-wide short-term insurance barometer released by Santam this week.

It reports that though South Africans in general are lodging fewer claims, the size of the claims is growing. A single hailstorm in Gauteng in 2013 wiped out a large part of the industry’s profits that year.

Climate-related events such as storms, floods, droughts and fires cause substantial damage, and SA’s creaking road infrastructure is a significant contributor to vehicle accidents. The Santam survey shows that accidents, not crime, are responsible for the bulk of vehicle losses — 78%.

“Even though theft does not come through as strongly in the barometer’s client statistics, crime still dominates the psyche in SA,” said Coutts.

In the mid-1990s, 30% of short-term insurers’ motor losses could be traced to hijackings, but this percentage has since fallen below 10%.

The barometer was compiled using a survey of 50 large companies, 119 commercial businesses and 250 consumers.

Picture: Gallo Images Insurers are exploring how sensors installed in homes and appliances can help detect disasters before they occur, including climate-related disasters such as the one pictured — in which a hailstorm collapsed a car port — thus saving insurers in claims.