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Why escape of water is not an unsolvable problem: four ways to reduce indemnity spend by 10%

Updated: Nov 4, 2023

Escape of water  -4 ways to reduce indemnity spend - image of a hand turning a tap on and spilling water

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Escape of water (EOW) is a problem that the insurance industry has never properly solved but at Procurato we believe we can. In the first instance it’s about treating EOW claims different from standard property claims and by following these four actions you could reduce your indemnity spend by at least 10%.

1. The right commercial model

At the core is ensuring you have a solid commercial model which drives the right outcomes and complements your focus whether that is indemnity control, customer satisfaction, expense reduction or a combination of the three.

Having a holistic strategy which targets the total average claim cost can derive a better overall outcome that looking at individual claims. For example, we often see insurers focusing on a cost per room for drying with the aim of providing a greater certainty on that element of the claim. However, this does not consider the nuances of how wet the room is or whether carpet is still in the room for example, nor will it incentivise the supply chain to use better drying equipment or ways to reduce cycle times thus an unintended consequence of this is potentially the opposite effect with extended drying durations driving up accommodation costs.

2. Project Management Principles

Successful project management of EOW claims starts with having a set of detailed handling principles, making sure a claim plan is set out at the start with your suppliers and your customers and managing the restoration against it. Our research has showed us that savings of c10% on claims costs can be made by having milestone steps in a claim and following them. This is in addition to improving customer satisfaction.

3. Alternative accommodation

In domestic claims accommodation can be up to 50% of the cost of the claim, yet our research has identified vast differences in performance, even from the same supplier. Average nights vary significantly between insurers and can be anything from 50 – 140 nights. Here are our top key savings drivers:

a. Optimise booking of short-term alternative accommodation. Is there driveway space for caravans which could house a kitchen for example? Can you use more flexible providers who will let you change from six to four months usage with minimal penalty? Can you make better use of hotels?

b. Be clear with your supplier about the performance drivers you expect and manage them to them

c. Improve drying by using techniques such as remote monitoring and speed drying

d. Make sure your activity is linked to your claim plan.

4. Restoration approach

Understanding and agreeing the right drying technique for the case is the single most important intervention an insurer can make. In a recent study we conducted over 20% of cases reviewed had the incorrect approach applied and therefore saw excess indemnity spend. More worryingly in very few cases did it appear the insurer had set a strategy (claim plan) for the outcome or seem to be monitoring progress with an eye on the clock or the cost.

The Procurato Way

We are the experts on escape of water claims. We’ll undertake a review of all your suppliers, so you know they are doing the right thing, that you’re paying them enough to get the best drying equipment and provide them with and train them on the guidelines for the best, quickest and most cost-effective outcomes.

We’ll analyse the accumulated data and learnings from your in-house experience and benchmark them against your peers to identify gaps and opportunities in the process. We’ll also make sure you’re asking the right questions of your claimants so you can understand their needs and give them the best service driving customer satisfaction up.

For more information please contact John Gaynor:

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