Insurers should foot the bill for smart water devices, white paper suggests

A new white paper from Johnson Controls and research firm Parks Associates calls for increased U.S. adoption of smart water products — and suggests insurers help pay for them. 

What’s happening: The paper suggests that insurers subsidize leak detectors, humidity sensors, and automated shut-off valves in homes and buildings to prevent water damage before it occurs, as they could prevent billions in payouts for water damage claims. 

• Sales of such devices “represent a revenue opportunity of more than $160 million by 2030,” the paper noted. 

Yes, and: It also emphasizes the need for professional installation by contractors. 

• “Thirty-four percent of smart water shut-off valve owners who installed the product themselves rated the process ‘very difficult,’ making it the #1 product type consumers have difficulty self-installing,” it says. “Water leak detectors come in #3.” 
• “Early detection and avoidance of water losses can only happen if smart water technologies are properly set up, connected, and functional,” it adds, emphasizing “the complexity of shut-off valves in particular.” 

The big picture: Water damage insurance claims average nearly $10,000 per incident, the paper found. 

• With smart water devices, data can provide a baseline of what is normal for any particular property — and detect anomalies that may signal leaks or malfunctioning appliances.

Yes, but: Adoption is low. Only five percent of U.S. single-family homeowners own a smart water leak or humidity detector, and four percent have a smart water flow meter/shut-off valve, according to the paper. 

What we’re watching: Some insurers are already incentivizing customers to adopt smart water products.

• Liberty Mutual, for example, offers policyholders discounts and installation support for certain Moen leak detection products, and Nationwide offers a discount on similar products from Phyn.