The cost of ‘escape of water’ claims is currently estimated at more than £2.5million every day and is set to become the single highest claim value category of insurance. So do we understand why, and can the insurance industry do anything about it as we head into a tangle of claims associated with leaks in all their various forms?
The rise in internal leaks can be tracked against the corresponding increase in our changing lifestyles and the sheer amount of water we use for a diverse range of devices. Even the average homeowner has more complex plumbing in the house serving washing machines and dishwashers, and will often have additional cloak rooms and en-suites. At the same time, old pipework and a legacy of an ageing housing stock which has not always been maintained with new materials has contributed to the issue, and there are still an estimated 10 million homes in the UK with lead water supply pipes.
The most common areas of damage are halls and landings which are adjacent to the “wet areas” but are not designed to withstand water, like the tiled walls and floors in kitchens and bathrooms. Reinstatement costs are increasing due to the improved quality of finishes, kitchen fittings and open plan layouts in the home. It is important for the insurers to control these claims and not push the customer away at First Notice of Loss (FNOL).
At Auger, our direct labour supplier model has proved to be the most cost effective and efficient way of handling these claims, and it is important that insurers utilise their supply chain earlier to reduce costs. We use technology to correctly diagnose leaking supply pipes first time, and will often re-route pipes around the building, thereby reducing the amount of expensive internal reinstatement costs. The wider insurance industry needs to work closely to bring to bear the combination of technology and skills together required to address this rising tide of claims in this category.