Craig Foster, CEO of Ondo InsurTech on LeakBot's success

As expenses rise globally resulting from the economic chaos of the past two years, it's reassuring to discover that innovation and technology are constantly evolving to help reduce costs for the customer, in ever new and inventive ways.

Craig Foster is the CEO of Ondo InsurTech Plc – the pioneering operative behind one of the UK’s most innovative – and now global, insurtechs. Foster and his team invented the IoT connected LeakBot system – a dynamic, next-gen smart device that monitors water flow and temperature within the home to track leaks and potential maintenance issues.

The uniquely simple insurtech product has been industry-shifting because it addresses a problem within the home insurance market that costs US insurers in claims annually, an estimated US$16bn. Data suggests that a trillion gallons of water are lost every year through domestic leaks in the property market, while the environmental protection agency in the US states that 20% of homes have leakages they are unaware of.

The solution also has a sustainable purpose globally, because water companies are one of the biggest consumers of energy. In the US, studys show that 5% of all energy usage stems from domestic purification systems. 

LeakBot’s offering has been so well received, that it has entered the burgeoning US marketplace operating via the exact same business model that is presented in the UK, Europe, and Scandinavia. The startup, which was originally called HomeServe Labs, also recently launched its IPO and rebranded the company as a public entity under the name of Ondo InsurTech Plc.

Strategic partnerships in the insurtech ecosystem

Ondo’s LeakBot is also partnered with Hiscox, a collaboration that formed in 2019 following a breakthrough pilot scheme. Hiscox was convinced of the business case and then made the decision to integrate LeakBot as standard across their whole customer base. Today, every Hiscox existing customer and every new customer is offered a LeakBot as part of their policies. The device is included free of charge and if a leak is detected, Hiscox will also pay for LeakBot engineers to visit the property and repair the problem.

Foster is understandably proud of his homegrown, UK company’s achievements. He says, “I originally set up an innovation lab for the HomeServe group. It was probably about six years ago. We had quite a broad remit where we were looking at opportunities within the field of the internet of things, and LeakBot was one of seven or so projects that over time became the main focus of the team.”

The motivation for the project came from HomeServe as the parent company, because the organisation has a large network of electricians and heating engineers. The group decided to set up an innovation lab to experiment, brainstorm, and see what potential the IoT could have on the business. “For example, you can imagine if a boiler is connected to the internet, for example, and you can see the fault codes remotely. That could have a quite dramatic impact on how you would sell services or repairs or that kind of thing,” Foster says.

LeakBot smart home insurtech innovations

Ondo already had partnerships in the connected heating space and so it turned its attention to plumbing devices and the IoT. It was then that the team realised there was a gap in the market for an effective solution to home pipe and plumbing maintenance – an idea they were keen to explore.  

"We went and looked for partnerships and we tested the existing products that were out there, but found they weren't very good. They were either very expensive systems where you cut a pipe and plumbed in a system, and they were fine but needed a professional install, or, there were these moisture sensors that could detect if water escaped onto the device.”

This solution, the team realised, was unsatisfactory, mainly because their experience in plumbing told them that when leaks occur in a domestic property, they tend to be hidden in a wall or a ceiling because pipework is hidden from view.

“So, we thought, is it possible to create something that you could send in the post to a homeowner, and it could just clip to a pipe and detect a leak anywhere on the mains water system,” says Foster.

Insurtech solutions for an industry-wide problem

The team didn’t know if such a simple system would be possible to develop because of a number of variables at play, but they enlisted the help of Ph.D. inventor, Sam Bailey, and put that problem to him.

Through a number of experiments that involved several prototype versions, and one testing platform that consisted of a plastic box and, bizarrely, 40 raspberry pie circuit boards that are used in schools to teach children about electronics, the solution was found.

“It was through one of these circuit boards, coded a few different ways, that we experimented with how to detect a leak through a pipe. It’s how we made the very first prototype. They're basically like a circuit board, and they've got a coding interface and kids can use them. You can code things on them and create all kinds of prototypes kind of hardware applications. They used them in schools to teach kids some basic coding skills.”

The team discovered a new monitoring system that uses temperature fluctuations to determine breaches – and subsequently patented it. They did this by measuring the temperature of the pipe as the proxy for the temperature of the incoming water and comparing that to the ambient temperature where the device is fitted.

The final, tweaked result is a small, easily fitted IoT device that can be clipped to a pipe and accurately reads and reports on the health of the entire property’s water system. Foster explains, “You clip it to the pipe, and there's a temperature thermistor here, and there's another temperature thermistor in the unit. And the system algorithm compares the Delta between the two. What we realised is that if there's a leak in the property, there's a permanent Delta in the temperatures because there's a permanent draw on the water.”

IoT insurtech devices revolutionising home insurance

The device the team created has such a sensitive response, that it can pick up even a very small drip within a system. This means that even the smallest leak within a water system is detected, alerting the owner, and the LeakBot’s insurtech team, who can address the issue before damage has occurred. In short, the invention means homes with the LeakBot system installed pay lower P&C premiums against water leak damage, and have problems fixed by the insurance company, before high-level damage can occur.

Foster is a passionate advocate of the solution, which he points out has literally, overnight, addressed a massive challenge within the P&C insurance sector. He says, “A drip every three or four seconds will show up as like a 0.2 degree of a temperature difference on the pipe. But the breakthrough really came when we realised that it solves a huge problem in the insurance industry.”

A Eureka moment for the LeakBot Lab team

But the magnitude of the invention was not immediately recognised because the team was so intent on solving the problem. They then realised they had created a benchmark solution following a chance conversation with a team from Aviva, who was interested in leak detector devices.

Foster says, “We were almost a bit sheepish about it because it was a very early prototype. We didn't really know why they were so interested in it. But it was from that conversation that the light bulb went on because they were the first people who explained to us that a third of all the claims that insurers pay out on home insurance policies involve ‘escape of water’ claims.”

“It’s a massive industry problem. The leaks that are causing those claims are exactly the leaks that this [LeakBot] detects – namely the ones that are hidden from view, hidden in ceilings and cavity walls. It seems like an obvious use case for the internet things, but actually, the existing products on the market don't really have any kind of commercial business case.”

P&C, Big Data and insurtech automation

Foster believes the IoT, automation technology, AI, and Big Data are all highly transformative forces within the insurance industry, and that breakthroughs like the one his team had with the LeakBot, are the tip of the iceberg when it comes to marketplace developments. These telematic/smart-style solutions will be both industry-changing and life-changing for customers, he asserts.

“ There's a few big tech trends that are widely anticipated to impact the insurance industry, namely AI, automation in the claims space, and big data. The internet of things is an area that's widely predicted to have quite a significant impact on the insurance industry, P&C specifically. I think car telematics was a very early example of this, where the insurers worked out that by fitting a black box in a car, you could actually manage that risk proactively by influencing the driver's behaviour.”

The future of smart devices and insurtech IoT

Foster also believes that connected devices will form the backbone of the P&C industry in years to come – and changes are happening in the space to that effect with companies adopting the new approach. He says by way of example, “I think Hippo probably installed about 500,000 connected home devices with their policies now in the US and their big picture IPO was about the future of home insurance and about using that risk data in a clever way to reduce loss ratios. That's an indication of where the future is headed.”

He is also, understandably excited about LeakBot’s future on the global stage as its adoption by international companies increases. The business model is simple, and the system benefits not only customers and insurers but the environment too, as water loss issues are dealt with swiftly and efficiently.

“You can offer the whole thing free to the policyholder. It pays back because of the risk reduction and the reduction in claims that you see on the escape of water. And, that was really our breakthrough because once Hiscox had done that for real, as a rollout, we then subsequently signed Direct Line, Covéa, Eaton Gate in the UK.”

UK insurtech offerings in the US marketplace

The company now offers the same proposition in Denmark with Topdanmark, with Länsförsäkringar, who got 50% market share of the Swedish market. In 2020, they also tested the proposition with SageSure and Geico in the US, and LeakBot is now launched in three States.

“In all of those cases, now across four different countries, we've proven that the same proposition works,” Foster says.

He adds that entering the US marketplace had its challenges, but persistence is already paying off. “When we went to a US audience… generally, the reaction we got was, ‘We've been to this movie before. We've tested some of the solutions. They either don't detect the right kind of leaks, or they're just really expensive, and there's no real business case. It's a bit too niche because the homeowner would have to contribute hundreds of dollars towards a solution.’

“But, what we've found so far is that's not been the case actually. We have managed to replicate the results in the US as we've seen in Europe. The response from customers is really positive.”

He adds, “I love solutions like that. But, the thing that inspires me is when you see the very specific use cases where the thing just adds up.”