If we reflect on the severe weather events that have hit over the last several years with increasing frequency, it’s apparent that climate change has become a major risk that carriers need to respond to – and not just with respect to the natural disasters themselves, but to the financial disaster that follows.
“Nature is outside our realm of control, but a carrier can determine how they work on their existing portfolio today,” John- Isaac Clark, CEO of Arturo, told Insurance Business.
Policyholders need to be reassured that they have comprehensive coverage and that underwriters have the latest information about a property so in the event of a loss carriers are prepared to handle the aftermath.
As such, property analytics has come to the forefront, and there’s no stopping the evolution of data usage and digital imagery.
Read more: Data analytics – where do we begin?
“Even outside of insurance and property, the breadth of data is truly the challenge of our time. We have tons of data points but we’re still learning how to actually utilize the information,” he said. “With machine learning and artificial intelligence, you can revisit a property on average every 90 days and the possibilities of how that can fundamentally transform a business is endless.
“All of this can now be done remotely and instantly. Even mitigative actions and offering incentives of lower premiums can be recommended.
“Carriers can understand what to take on and what to renew, ensuring the longevity of their entire book of business while reducing their loss ratio. With planes and drones collecting imagery within days of a disaster, carriers can see exactly which homes were impacted without sending out a claims adjustor.”
When it comes to underwriting, Clark added that it was traditionally a manual and unpleasant process, with long questionaries to receive a quote with homeowners rarely knowing the answers. This challenge led to on-site inspections to validate information, which was both costly and time consuming.
“With AI built to understand imagery and with more imagery available every day, underwriters now receive highly accurate information derived from property images and are moving towards a frictionless underwriting process,” he said.
Renewals have also been a less laborious process as AI models can pre-identify changes that have been made to the property over time.
Read next: AI: a risk management game changer
“AI collects valuable insights to determine how the risk of a home has changed and how its associated insurance premium should change in response,” he said. “Carriers can make big improvements in the efficiency and cost for underwriting.
“While climate change can seem like a daunting force to contend with, there are tools to be able to grapple with it. We are in the midst of an imagery and AI gold rush, and carriers now have the tools to catch new risk faster and strictly manage their portfolio.”
