Insurance Companies Love Risk Mitigation Technology

Updated: Jun 22

Did you know that over 35% of all property insurance claims come from water damage and freezing? Or that the average claim exceeds $10,000? According to the Wall Street Journal, one in 50 homeowners filed a non-weather water damage claim between 2013 and 2017. Worse, there has been a doubling of water claims over $500,000, and claims over $1 million have tripled! Cumulatively, the insurance industry pays out $13 billion a year nationally for these claims.

Why is this happening? Industry observers speculate that aging homes from the postwar era are starting to show their age. According to insurance carrier GNY, mid-century high-rise buildings with galvanized piping are particularly high-risk. And in new or renovated homes and buildings, we are seeing more water fixtures installed than ever before. Larger homes mean more bathrooms and sometimes multiple kitchens. But it's not just toilets, kitchen sinks, and appliances. More and more homes are opting for amenities like whole-home filtration systems, wet bars, and saunas. This has resulted in an astounding 40 points of connection to the plumbing system within a typical home. High-rise apartment buildings and even commercial buildings are seeing a similar inflation of the number of systems that can create water damage risk.

With this new risk landscape, insurance companies are looking for ways other than raising premiums and deductibles to cover increasing costs. Their dream is to reduce claims by shortening the time to discover a leak and respond to it before damage can occur. The only way to accomplish this is to add situational awareness to a home or building, which can be achieved by increased vigilance of homeowners and building operators. But it's irrational to think that individuals will have eyes on every potential leak source 24 hours a day, 365 days a year. This is where the Internet of Things (IoT) can help.

Technology Can Prevent Damage

IoT sensors can be deployed within a home or building to instantly detect a leak. Actuators can then automatically close valves, and homeowners or building operators can be immediately alerted of the situation. These sensors are constantly monitoring for leaks at all hours of the day.

IoT can help monitor for many conditions beyond leak detection. For example, alerts can be sent warning of temperature extremes that may result in frozen pipes or overheated machinery. Temperature sensing can be applied to physical surfaces as well, which is useful for monitoring appliances and mechanical equipment like air conditioners and basement sump pumps. Data gleaned from these sensors can then be used for predictive maintenance, with a goal of increasing the mechanical efficiency and lifetime of the equipment.

Clearly, insurance companies see the benefit of such technology. In fact, a recent report by LexisNexis found that homes with leak detection systems saw a 96% decrease in water damage claims compared to those homes without such protection. It's becoming increasingly clear that technology can have a major impact on property damage claims. Because of this, insurance companies have been ramping up their investment and evaluation of IoT solutions for homes and businesses. Homeowners and building operators who take advantage of IoT see a fast return on investment, and the relief of peace of mind.

A Unique Challenge for High-Rises

While there are dozens of IoT risk management products available for homes, there are few options for protecting entire multi-story buildings. Fortunately, Perceptive Things provides an IoT solution specifically designed for residential and commercial high-rise building operators. Our system keeps a constant eye out for damaging conditions, immediately notifying building staff when an incident occurs. Instant detection can close a valve and inform staff of a leak within seconds. Staff is not only immediately aware of the situation, but precisely where it is located, saving precious time. This is a massive boon to an often overlooked problem. Without such insight, water can cascade for several floors, making it difficult to identify the origin of the leak. This leads to valuable time lost, making the difference between a simple clean-up job and insurance claims for tens of thousands of dollars.

The Perceptive Things platform consists of a secure building-wide wireless network, a suite of environmental sensors and actuators, and a cloud-based management platform that can be accessed from any digital device. It is simple and non-invasive to install, and can provide protection for a host of damaging conditions: water leaks, temperature anomalies, door/window access, and other environmental monitoring options can be added a la carte, on your schedule, with little incremental cost. Our goal is to make it quick, easy, and cost-effective to make your building "smart".


Perceptive Things protects homes and businesses by reducing risk and enhancing building operations with a wireless network and sensors that is cost-effective and simple to install and use.

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