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How HomeServe Labs plans to use the IoT to shake up the insurance business

Home maintenance services provider HomeServe grows its internet of things startup internally, and is now targeting the insurance industry with a leak detection system

HomeServe Labs, a startup division sitting within home services provider HomeServe, is aiming to shake up the insurance industry by using the internet of things (IoT) to bring down costs incurred by water damage.

HomeServe has been providing home maintenance assistance to consumers in the UK, mainland Europe and the US for almost 20 years, building itself into a £500m FTSE 250 business in that time.

HomeServe Labs was conceived following an internal leadership change in 2014, when COO Martin Bennett was elevated to the position of CEO of HomeServe Membership.

Prior to taking on the role, Bennett decided to take some time out to explore ideas around digitisation and innovation, and how they could best be exploited to serve the business.

Craig Foster, at the time HomeServe product director, also attended these sessions, which proved to be a valuable learning process for both executives.

Foster, who has a digital background and had run HomeServe’s e-commerce business for some time, told Computer Weekly that, during this process, the two came to understand how they needed to change their business’ attitude to digital innovation,

The sessions also allowed the two to understand how the IoT was going to have a huge impact on them, far more than they had previously thought.

“When Martin took over, we began work on a plan to combat those problems. Using internal seed capital I was told to hire a team, given my own space outside of our normal business processes, and a brief to figure out how the IoT would affect our business model, and figure out a scalable business model to address that,” said Foster.

Experimental phase

Initially, Foster’s team ran a number of small experiments, focused mostly on smart thermostats which, it was felt at the time, were going to be the biggest single impact on HomeServe’s business.

Since the firm had made an equity investment in smart heating control firm Tado, and partnered with Google’s home IoT unit Nest to provide network services and an application programming interface (API) for UK customers, this made a good deal of sense, said Foster.

“We started to learn about plugging our services into smart thermostats so that, for example, when it recognises a problem it can then call out our engineer,” he explained.

However, the team at HomeServe Labs quickly came to realise that, although being able to use IoT connectivity to control and manage the running of heating systems was useful, it could also create a problem.

This is because there is one aspect of how such systems are maintained that, if neglected, could develop into a costly problem for homeowners – that of water leakage and damage.

“We found that leak detection technology was, by and large, underwhelming,” said Foster.

“Everything on the market tended to be moisture detectors. So Martin challenged us to create a leak detector that could be clipped to a pipe and detect leaks anywhere on a customer’s system.”

Temperature differential

HomeServe Labs eventually hit on a solution to the challenge: by using thermistors – a type of resistor where resistance depends on temperature – connected to a Raspberry Pi and a Sim card, a functioning detector could be build that could detect a leak in a customer’s property by clipping it onto the main water pipe.

The core idea behind this is simple, according to Foster. When a tap is running and water is being drawn onto the property, the pipe will chill slightly. By using the two thermistors to detect and measure the temperature differential between the pipe and the ambient temperature, the system reveals an accurate picture of water usage at each property where it is deployed.

For a customer, this information could be incorporated into an application that messages their smartphone if they have forgotten to turn off the bathroom taps, for example.

More importantly, for the insurance industry the data offers valuable insight.

“With small leaks, we realised that if we monitor quiet periods late at night when nobody is running water, the tiniest leak will show a temperature differential,” said Foster.

“Water damage accounts for a quarter of insurance pay-outs in the UK – much of it in claims caused by small, unnoticed leaks that cause substantial damage over a long period.”

Lower premiums

By delivering this early warning information to insurers, Foster hopes the industry will be empowered to tackle the problem of water leakage in domestic properties much earlier.

This will save home insurers from having to make substantial payouts when the problem manifests destructively, and bringing down the premiums paid by homeowners to their insurers.

For the consumer, the HomeServe Labs system uses two AA batteries, and runs on Sigfox’s two-way ultra-narrowband IoT network, which is currently being rolled out in the UK by operator Arqiva.

Foster said Sigfox was selected because the leak detector does not have particularly heavy data usage, and because it made it marginally easier for users to not have to worry about connecting it to their home Wi-Fi networks.

“We don’t want to rely on the user to have to do too much, so the experience for them is very easy, they can essentially just clip it onto their pipe and press a button,” he said.

“We are already selling directly to consumers but we see the business to business to consumer route, by partnering with home insurers, as a more profitable model.

“The solution is cheap enough for them to give away for free, and it pays back on claim savings. We deliberately designed it to make the underlying cost base as cheap as possible.”

The device was launched publicly earlier in 2016. The response from the insurance industry has been promising, with a number of providers trialling the technology in the UK and in Europe.

“We really think we’ve hit on something as insurers begin to realise how the IoT will affect their business,” said Foster.

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