While discussing water damage claims with insurer partners, an important insight surfaced about the timing of mitigation efforts. Specifically, the critical window for appointing a mitigation specialist may often fall outside the optimal time, leading to significant delays and increased costs. This concept revolves around the idea of finite windows of opportunity—much like a tunnel closing during rush hour, once the optimal window closes, the recovery process becomes more complicated.
The Tunnel vs. The Long Way
In the context of water damage claims, insurers play the role of the driver, and the destination is getting the insured property back to pre-loss condition. There are two main pathways to achieve this:
- The Tunnel (Early-Stage Mitigation): Acting quickly in the initial hours can help contain the loss and prevent further damage. This approach maximizes the potential for a faster and more efficient recovery process.
- The Long Way Around (Delayed Mitigation): Once the critical time window passes, the mitigation efforts become less effective, and the process to restore the property becomes slower and more expensive.
The Dynamic Nature of Water Damage
Water damage is not static—it spreads and escalates over time. The optimal response requires prompt action to prevent further damage. If insurers treat the damage as static and begin repairs without focusing on mitigation, they risk missing the chance to limit the loss in the early stages.
The Coordination Triangle
The traditional approach to water damage involves multiple steps and parties:
- The insurer engages repairers.
- The repairers send out estimators.
- The estimator coordinates with tradespeople to start repairs.
This coordination, while necessary, adds significant time to the overall process. By the time mitigation is considered, the opportunity to limit the spread of damage has often passed, and the repair process becomes much slower and more costly.
Benefits of Early Mitigation
Taking action early with a mitigation-focused strategy can have significant benefits. By containing the water spread before it reaches building materials and porous elements, the damage is minimized. This results in a shorter, more cost-effective repair process. Recognizing that water damage is dynamic, and acting quickly, is crucial to optimizing outcomes and reducing repair costs.
The Role of Data in Improving Claims Outcomes
To better understand the impact of early mitigation, insurers can analyze data from previous water damage claims. By comparing claims where mitigation was implemented within 24 hours to those that followed the traditional repair process, insurers can see a clear correlation between the speed of mitigation and lower overall claims costs.
Steps for Data Analysis:
- Review water damage claims from the last 12 months.
- Align the claims based on consistency in damage type (e.g., burst pipe) and property profile (e.g., 3-bedroom house).
- Split the claims into two groups: Group 1: Claims where mitigation took place within 24 hours. Group 2: Claims with a generalized repair strategy.
Some of our partners find that they aren’t even capturing this data and this is something that they can start doing internally.
Let me know how you get on with this exercise.