A partnership announced June 25 between builders' risk insurer Shepherd and Toronto-based construction technology firm Brickeye is the latest attempt to link insurance costs to tech adoption. Under the program, projects using Brickeye's water-loss prevention platform can qualify for incentives through Shepherd's "Shepherd Savings" program, including reduced water-damage deductibles and premium credits.

"What we're trying to do is bring behavior-based pricing into commercial insurance," says Justin Levine, Shepherd's CEO.

Rather than relying solely on historical loss data and underwriting questionnaires, Levine says insurers increasingly have access to real-time information about how contractors operate in the field and what technologies they use to prevent losses.

The implications can be significant. Levine says projects using Brickeye's technology can see water-damage deductibles reduced by 50% or more because leak-detection sensors and automated shutoff systems materially alter the risk profile of a project.

The concept is not new. Insurers have spent several years increasing scrutiny of water-damage mitigation plans, severe-weather preparedness and other project-specific controls as deductibles climbed and coverage requirements tightened. The difference now, industry sources say, is that some insurers are offering financial rewards rather than simply requiring them.

From Risk Management to Risk Pricing

Monitoring sensors are "now becoming very common," says Sedat Kunt, Marsh's national builders' risk practice leader. "It's one of the most significant shifts in builders' risk underwriting."

Water damage remains a primary driver. Kunt said plumbing-related losses continue to rank among the leading causes of builders' risk claims, prompting insurers to seek greater visibility into how contractors monitor temporary water systems, respond to leaks and manage exposure during construction.

Water-flow sensors and automatic shutoff valves can detect leaks, monitor abnormal water flow and automatically stop water service before small leaks become major losses. Some builders' risk insurers are beginning to recognize these systems when evaluating project risk and underwriting terms.

Photo: Alert Labs

Darren Tasker, head of construction underwriting for Allianz Commercial in the Americas, says carriers increasingly recognize the value of monitoring technologies and are factoring them into their evaluations.

Shepherd "is really embracing the technology and are quite transparent on their quotations on the discount that the company receives," Tasker says.

He adds that adoption of water-mitigation systems on large building projects may already be approaching 50% or higher, depending on project size and type.

How much weight insurers assign to those measures remains a point of debate.

Jason Behrer, managing director of builders' risk at insurer Aon, describes the market as being in its early stages. While insurers are interested in technologies that can reduce water losses, he says many remain cautious about assigning significant pricing credits until more performance data is available.

"Every carrier you talk to has an interest to see this sort of technology," Behrer says. "They see the potential for it, but they're not yet there."

Others suggest the market has already moved beyond experimentation.

Matt Wagner, head of construction property at Zurich North America, says project-specific controls can directly affect deductibles, pricing and coverage when underwriters have confidence in the measures being deployed.

"If a customer is willing to invest in safety up front, and if it's something that we have seen before and we're comfortable with, then we want to make sure we're supporting that project," Wagner says.

Wagner adds that those measures can be the difference between a $2 million water-damage deductible and a $1 million deductible on a large project.

Rather than just relying primarily on applications, schedules and historical loss information, insurers increasingly want evidence that project teams have implemented and maintained measures designed to prevent losses before they occur.

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From Installation to Verification

The implications extend beyond insurance premiums.

Several sources note that leak-detection systems, automated shutoff technology and other monitoring tools are increasingly viewed as operational assets that reduce downtime, limit schedule disruptions, and prevent losses before insurance claims occur.

As builders' risk deductibles have climbed into the hundreds of thousands—or even millions—of dollars on large projects, avoiding a loss has become as important as recovering from one.

Kunt says insurers may eventually seek greater verification that mitigation systems remain active throughout construction rather than relying solely on representations made during the underwriting process. A project that receives favorable terms because a monitoring system is installed may eventually need to demonstrate that the system remained operational at the time of the loss.

At the same time, advances in artificial intelligence are beginning to influence underwriting workflows. Several industry sources say AI tools could eventually help insurers analyze project schedules, risk-control plans, and other project information more efficiently, although most described the evolution as still in its early stages.

But for now, builders' risk insurers are increasingly looking beyond what contractors and owners say they will do and focusing on what they can demonstrate they are doing to reduce losses. And for projects that can demonstrate that discipline, some insurers are willing to reward it directly.