Technological advances in insurance

Technological advances have brought to the market a range of new products and services. Some are used to deliver innovative insurance solutions while others assist insurers in working with their clients to improve service or reduce premiums. Some help prevent insurance claims altogether through early warning systems or by deterring criminals. However, not all are as helpful as they may at first seem.

Here we examine what they are and what (if any) benefit they provide.

FloodFlash

Due to weather patterns becoming more extreme and more frequent, obtaining flood cover in flood areas has become increasingly difficult. While Flood RE has provided a welcome boost for private households, there is still a huge hole when it comes to commercial risks.

For this reason, a parametric insurance has been produced by FloodFlash which works in a very different way to traditional flood insurance. With this policy, each insured property and asset has a mobile-connected sensor installed which reports any flooding. The policy holder sets the level of pay out and when the agreed trigger-depth has been reached, the sensor alerts the insurer and automatically triggers the claims process, without the need to submit documents.

Due to the way this policy operates, there are fewer costs and less uncertainty in setting up the policy, which means that premiums can be potentially lower than traditional providers.

Leak detection systems

Water leaks account for a very high number of claims within the household market. In an attempt to combat this a number of insurers and clients are looking to install leak detection systems. One of these is called LeakBot which monitors the household water system 24 hours a day and sends an alert via mobile phone if it detects unusual activity which may be caused by hidden leaks.

Black boxes

The cost of car insurance for young drivers is always a contentious subject with clients. Black box insurance (also called telematics) has been available for a number of years and is worth considering for new or inexperienced drivers. A small box is fitted to the car and measures various aspects including how, when and where the driver uses the vehicle. Insurers use the data to calculate a personalised renewal quote based on driver performance. It can also be used in services like Accident Alert or Theft Recovery.

Not-so-smart security devices

Not every advance in technology delivers the benefits it claims. Although increasingly popular, household security devices need to be treated with caution. Controlled via a mobile phone, these smart devices include doorbells, CCTV, fire and burglar alarms and door locks. Ironically, although this technology has been designed to enhance security, there are issues over how safe they are themselves.

The fact is that most of them are not secure. As with all types of technology, particularly those linked to the Internet or the cloud, there is always the possibility of them being hacked. For this reason, a number of insurers will not accept them as an advanced form of security. It is therefore very important that you check with your broker before buying and installing these devices.

Charlie Higson, Senior Account Executive, Oxford