IoT device innovator makes homes smarter, goes public
Special purpose acquisition company (SPAC) Spinnaker Acquisitions completed a reverse merger with LeakBot, UK based B2B Insurtech, to create Ondo InsurTech. This new entity will be the first Insurtech to go public in Britain. Ondo brought in about $4.5 million from investors, grossing a market capitalization of about $10.8 million. It will use the fresh capital for partner development, onboarding and improving its delivery and IT systems.
Home insurance is a large market with $107 billion of Gross Written Premium (GWP) in the markets where Ondo is operational. With little product differentiation, loss ratios (LR) tend to be high e.g. in the UK, average home insurance LR in 2020 was 52.4%. Of £4.8 billion of GWP, £2.5 billion in 2020 was paid in claims. Escape of water claims are among the top sources of claims in home insurance, costing insurers in Ondo’s existing markets over $17 billion annually.
The Internet of Things (IoT) device maker has a patented water security system that prevents small leaks from turning into insurance claims. The company claims the system is capable of delivering nearly 5% improvement in a typical LR. Its successes paved the way for international rollouts, motivated by the large market opportunities in UK, US and select Nordic countries.
Consequently, it has witnessed accelerating market traction with approximately 39,000 registered devices, +63% growth vs a year ago. Revenue at end-September 2021 was £0.94m with the last 6 months annualized revenue run-rate of £1.2m.
Ondo provides a cost-effective means for homeowners to detect small water leaks within a home, without the need for multiple sensors or complex, plumber-installed products. The patented technology is sensitive enough to detect water leaks as small as 3 ml per minute anywhere on a home’s water supply, by simply clipping the wireless device on the main water pipe. Its Thermi-Q technology works by detecting a slight drop in expected pipe temperature generated when a leak is present.
The intelligent algorithm is constantly running and protects homes by escalating damage and sending alerts in the event of unusual water flow, allowing homeowners to act swiftly. The technology is mostly provided free of charge to householders by home insurance companies and commands strong customer satisfaction, with a Trustpilot score of 4.8. By finding and fixing leaks, the device curtails insurance costs, saves water and prevents excessive waste of building materials.
The solution connects to the home wireless network and, if it detects a leak, alerts the customer via a mobile app. It provides access to a team of expert engineers to ‘find and fix’ the problem.
In February 2020, Hiscox became the first UK insurer to offer a free LeakBot device as standard to all new and existing home insurance customers. In the US, domestic water leaks account for more than a trillion gallons of wasted water every year. The damage caused by these leaks accounts for around 30% of the underwriting cost of a typical home insurance policy in the US and UK. Ondo now has several live partnerships with insurers such as Hiscox, TopDanmark, and Direct Line, across the UK, US, and Scandinavia. The solution is also available in Sweden with Länsförsäkringar, in Denmark via TopDanmark, and in the United States with SageSure and Mapfre.
IoT is one among fundamental trends underpinning digital transformations. It is at the forefront of bridging the digital and physical worlds, with benefits ranging from improving operations to the management of physical assets, and health and well-being.
The potential economic value that the IoT is expected to unlock is large, estimated to be $5.5-$12.6 trillion globally by 2030. Though IoT’s economic-value potential is concentrated in B2B settings (e.g. factories) with around 65 percent of the estimated IoT value potential by 2030, the value of B2C applications shows healthy growth with multiple ramifications for the insurtech industry.
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