As buildings become more sophisticated at auto-detecting weapons, water leaks, concealed damage and other risks, insurers are recommending more “smart” technologies and incorporating them into underwriting discussions.
Some of the flashiest new smart-building technologies are in security. A security center staffed by a lone guard will find it difficult to monitor a wall of screens. But now, their video feeds are being analyzed by artificial intelligence-based technology that alerts guards when it detects weapons, suspicious objects or even erratic movement. If the threat checks out, a guard can lock down the facility, send out mass notifications and locate a suspect for police at the touch of a button.
Smart security centers like these are “increasingly common” at large college campuses and “major health care organizations,” says Chad Barnes, a Syracuse, New York-based senior vice president and property risk consultant at Marsh. They’re also starting to gain traction at more commercial buildings amid increasing fears of mass shootings and other random violence, he said.
The security systems epitomize what designers want to achieve with smart buildings, where networked sensors from multiple systems are filtered through AI to produce an accurate, actionable and centralized source of intelligence.
“The world is your oyster today,” Mr. Barnes said. “If you’ve got enough money, you can have a tremendous amount of data and analytics at your fingertips to help you manage your building and manage the safety of your inhabitants from the security side.”
Video intelligence can help with safety as well as security. “We’re not far away from an AI in a grocery store seeing that there was liquid spilled on aisle 3 and that AI software alerts the clerk to go clean up — there’s no more waiting and having someone fall,” says Stephen Penwright, San Francisco-based head of underwriting for national accounts at Zurich North America.
Video technology also is used more frequently to improve safety in other industries, including entertainment, Mr. Penwright said.
“Concert venues have cameras that monitor if there are too many people in a space and then can send a security guy to separate those people, because you don’t want to have people trampled,” he said.
Smart water leak detection also is in demand. More than 40% of losses in occupied buildings can be attributed to water-related damage, more than double the damage from fires, windstorms or earthquakes, according to a 2024 Aon report. The number appears to be rising, perhaps due to aging buildings or deferred maintenance, Aon says.
Building managers can deploy inexpensive sensors that communicate leaks in real-time via wireless networks, Mr. Barnes says. The newer development is “volumetric” systems, in which sensors attached to pipes report to AI software that is trained to find unusual water flow patterns. When the system detects or suspects a leak, it can shut off flows automatically or remotely.
As the cost of water sensors has decreased, Zurich now recommends them as a best practice in its water-damage mitigation plans for health care facilities, Mr. Penwright said.
Zurich customers who adopt recommended risk improvement actions may get some underwriting benefit. The insurer’s Resilience Solutions division recommends select water leak detection vendors to its clients, along with other smart technology, such as equipment condition monitoring.
In the past, insurers hesitated to offer premium credits or lower deductibles for emerging smart building technologies because of a lack of data proving their effectiveness, says Jason Behrer, a New York-based managing director for builder’s risk at Aon.
“But as competition builds in a softening market, it is more likely that we will see an increased willingness to accept that certain solutions will achieve the desired expectations,” he said.
A lesser-known but potentially valuable smart system can be found deep inside structures, said Robin Kemper, a Lawrence, New Jersey-based senior risk engineer at Zurich Resilience Solutions. Structural health monitoring uses embedded sensors to collect and analyze data on a structure’s condition to detect damage early. It is commonly used on bridges but is starting to be adopted for buildings that experience high loads or environmental stresses, such as manufacturing and utility sites, Ms. Kemper says.
Sensors such as strain gauges and accelerometers can detect corrosion and stresses well ahead of a visual inspection. Seismic gauges are already required by California code in certain buildings. With such gauges, “after an earthquake, it’s a lot easier to determine if that building is structurally sound and people can go inside,” Mr. Penwright says.
Data center operators rely heavily on smart building technologies, Mr. Penwright says. Their servers are vulnerable to humidity and overheating, and minimal staff are onsite. Smart systems monitor servers around the clock and can alert offsite staff if they detect rising heat or moisture levels.
When evaluating a smart building technology, companies should make sure it’s appropriate for their particular risks and be wary of introducing new risks, Mr. Barnes said. For example, smart systems may falter during power outages. They may be equipped with internal batteries or backup generators, or deploy a “degrade mode” that preserves safety-critical functions when failures occur.
In addition, some building management systems have been exploited by hackers. Earlier this year, Honeywell issued patches for its popular building management system software after a cybersecurity firm found it contained a “backdoor” to corporate networks.