While EY’s analysis of last year’s household insurance results found that insurers achieved a good underwriting profit, claims costs have been rising in 2013 primarily driven by a continued increase in escape of water claims putting profitability under pressure.
Almost a quarter of all domestic property claims were for escape of water in 2012 and insurers have paid out over £700 million in water claims in each of the last two years.
Insurers are looking at these claims with greater scrutiny and intermediaries would do well to make sure their clients are aware that they have a responsibility to prevent escape of water, rather than assuming that all leakage issues should be handled by their provider.
Burst pipes are the most common problem and if it happens in the loft, the damage caused can be just as devastating as a flood and can lead to a client having to vacate their home whilst damage is repaired. As the nights draw in and temperatures start to fall, I’d urge intermediaries to provide their clients with a simple risk management guide which could prevent a problem occurring or at least demonstrate to an insurer that they took reasonable steps to mitigate the risk should a claim situation arise.
Here are a few points that you could include:
• Check your central heating system on a regular basis and ensure the thermostat is working
• Get your boiler serviced annually be a registered Gas Safe engineer
• Keep your heating on during cold spells at a minimum of 15oC
• Protect and lag exposed pipes
• Replace washers on dripping taps
• Know where the stop cock is and how to turn it off in an emergency
• Keep a list of emergency contacts such as plumbers and electricians to get help quickly
If a property is unoccupied for a period of time (for those lucky enough to escape the cold for a couple of weeks of winter sunshine maybe):
• Drain the central heating system
• Get a friend or neighbour to inspect the property on a weekly basis to check all is ok
• Leave any loft access point open to circulate air
And if the worse does happen, there are still a few simple steps clients can take to minimise the damage which will certainly go down well with their insurer:
• Turn off the water supply
• Call a plumber immediately they notice any leak no matter how small
• Check the electricity supply and call an electrician if they suspect any damage
• If a pipe is frozen, slowly thaw the affected area with a gentle heat
There are also a number of preventative solutions available on the market such as the Floodcheck auto valve which can be installed to protect a home whether your client is at home or away from their property. Floodcheck, for example, automatically switches off the main water supply if it detects a water leak or if the air temperature drops below 3oC. Installing devices like this can have a positive impact on household insurance premiums as well!
The best advice you can give your household clients is to be prepared and if they follow this simple risk management guide, they should be able to prevent damage to their property, avoid any personal upheaval and in the longer term, save money on their insurance premiums.