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Use Cases for Sensors & Home Insurance to Lower Loss Ratio

By June 30, 2021March 25th, 2024No Comments

With the rise of smart homes, carriers have started to offer policyholders unique ways to save. In-home sensors can dramatically reduce risk to a property and can lower the loss ratio for insurers.

Sensors for reading in-home conditions and software for sharing these conditions through cloud technology are quickly catching on for everyday homeowners. But how exactly are carriers today offering discounts?

WaterStreet Company is here to help inform insurers of ongoing P&C insurance industry trends. We are a provider of P&C Policy Administration Software, supporting insurers through policy and claims administration, document management, third-party connections and more.

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Some security systems that go beyond deadbolts and outer security cameras may qualify for a significant discount on home insurance. According to Safe Wise, installing monitored safety and security devices can reduce homeowners insurance by up to 20%. With monitored security, homeowners choose professionals to install and monitor security of the home around the clock.

Other ways to monitor safety and security include window and door sensors for knowing when someone may have entered the home and self-installed security cameras for constant monitoring and cloud storage. Carriers may choose to offer discounts for these security systems as a result of lower losses from community engagement with security and the policyholder’s ability to respond immediately to a theft.


Flooding is among the top perils homeowners experience as 20% of all insurance claims relate to water damage. The cost of annual flood damage reached $17 billion between 2010 and 2018 in the US.

Homes that are at a high risk of flooding due to geographical location have more variables to review with home insurance carriers. While reviewing these variables, carriers can offer discounts and reduce premiums if the policyholder has storm shutters, enhanced roofing, shatterproof glass and other storm proof features installed. This isn’t the limit to how homeowners can prevent flooding, and in fact all homeowners can take steps to reduce their risk of flooding from leaking pipes, rain runoff and groundwater.

Flood sensors enhance the homeowner’s ability to respond to flooding. These sensors can be placed in the basement and other at-risk areas of the home to notify the homeowner immediately if there may be a flood. Many flood sensors can also allow the homeowner to immediately shut off the home’s water supply. Flood sensors can dramatically save on claim estimates, and carriers have the opportunity to offer discounts for policyholders who take this step to reduce their risk. Farmers Insurance offers a 3% discount for homeowners with leak detection, among others.

Fire & CO2 Detection

While most homes are required to install fire and smoke detectors, carriers can offer discounts that take these detectors a step further.

Smart fire detectors not only sound an alarm when sensing fire or smoke, they can also send an alert to the homeowner to immediately notify them whether they are away from the home or asleep. Carbon monoxide is especially dangerous when the homeowner is asleep.

Discounts for smart fire detectors vary between carriers. Carriers should consider discounts for policyholders who have steps in place to respond quickly to fire and poisonous gas leaks.

WaterStreet Company & IoT Devices

WaterStreet Company is dedicated to serving all facets of the Property & Casualty Insurance Sector. We understand the importance for carriers and MGAs to adapt to market changes.

Many carriers today are considering how smart home devices can reduce risk for policyholders and incentivizing the installment of these devices with discounts. In some cases, the software carriers use can connect with the sensors homeowners place in their homes to reduce the time it takes to make a first notice of loss. This can lead to a massive reduction in losses when insurers have a finger on the pulse of any perils that may affect a home.

WaterStreet Company’s cloud-based Policy Administration Software is built with an advanced API, allowing carriers to connect to any number of third-party solution vendors to make these data sharing enhancements possible.

Reach out to WaterStreet Company today to request a consultation and demo of our solutions.

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