At a glance
- Escape of water is one of the insurance industry’s greatest challenges
- For customers, the disruption caused by an escape of water incident can be significant
- We explain how Zurich is working with claims management specialists Sedgwick to minimise disruption for customers
Escape of water in domestic properties is a significant challenge for the insurance industry. In just three years, the total cost of escape of water claims has risen by nearly a quarter.
There are many reasons why the total cost of claims is increasing, with more high-rise accommodation, an increase in the quality and cost of furnishings and fittings, and a growth in the number of properties built using modern methods of construction (MMC), among them.
MMC, high-rises and escape of water risk
The Government’s Housing White Paper highlighted the need to use land more effectively, and encouraged the use of higher density housing, explains Pauline White, Real Estate Analyst, Zurich. She says: “We have found in higher rise blocks that an escape of water incident can cause much more damage and interruption to our customers, as water can cause damage on several floors, the severity depending upon how long until it is discovered.”
Another challenge is a widespread lack of understanding about how buildings constructed using MMC will respond in the event of a significant escape of water.
Ian Gibbs, National Technical Manager at claims management company, Sedgwick, says: “The last major flooding event in Cumbria in 2015, provided an opportunity to really innovate in our approach to the impact of water on buildings.
“We implemented our approach to minimise strip out, driven by our understanding of the resilience of building materials. These lessons have been transferred to escape of water incidents and our approach has been refined.”
A holistic approach to escape of water claims
Although certain types of property can pose particular challenges, escape of water is a major risk in any domestic property. Escape of water incidents can cause significant disruption if people are forced to leave their homes for lengthy periods while repairs are carried out.
While Zurich is working to educate our customers about common causes of escape of water – such as broken or corroded pipework, or incorrectly plumbed-in appliances – our relationship with Sedgwick, and our other loss adjusters, enables us to minimise disruption when incidents do occur.
“While it’s more economical for a drying company to simply remove wet fixtures and fittings so there’s very little left to dry, for a customer that could mean their entire kitchen unit is removed, or their timber flooring is stripped out, when it hasn’t actually been destroyed – it’s just wet,” says Ian.
“Because we have an integrated supply chain,” explains Ian, “we can take a different approach to spend more time drying if necessary, because that’s the right thing to do. It’s important to stress that this is not about saving money; it’s about looking at what’s best for the customer, and then working out the most cost-effective way to achieve that. Most of the time, the customer’s preference will be to stay in their property if possible, and we will work with them to achieve that.”
Providing technical expertise
Customers also benefit from a wealth of technical expertise about how different materials will respond in the event of a significant escape of water.
“We are constantly trying to come up with new ways to minimise stripping out of materials, and therefore minimise disruption to customers,” says Ian.
“In recent years, there’s been a lot of research about the resilience of different materials in the event of flooding. We’ve taken that learning and applied it to escape of water, and have done a lot of practical testing about what’s possible. We’ve found, for example, that even where materials are wet and appear to have been damaged, that damage isn’t always permanent.”
Ian says that customer communication is key to the successful handling of a claim.
He says: “You have to listen to the customer to understand what they really want, and take care to explain what you’re doing and why. It’s about showing them that you’re doing the right thing, for the right reason.”
This article counts towards accumulating your annual CII CPD structured learning hours for Real Estate.
By reading this article, and correctly answering the three questions below, you will have achieved the following learning outcome:
Recognise the most common causes of escape of water and explain the impact of escape of water losses on property claims.
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