Verisk, an organization that is serving the P&C insurance industry for more than 50 years, reported in 2022 that “Roof age inaccuracies cost homeowners insurers $1.31 billion in premiums annually.” This represents a significant amount of money. Reference: https://www.verisk.com/insurance/visualize/capturing-the-flavors-of-roof-risk-with-reliable-data/
In property insurance, whether it’s for homeowners or commercial properties, U.S. P&C insurers consider factors such as roof material, roof shape, roof anchor, roof condition, and any details about roof renovations. These data points become underwriting and rating factors used to suggest appropriate products, coverage, and pricing. There are also typical exclusions for wear and tear, the roof’s age, lack of maintenance, and earthquakes. In some regions, there might be exclusions for wind or hail damage based on susceptibility to those risks. Insurers must also evaluate losses paid for roof damage as part of their portfolio analysis to decide whether to add or exclude coverages in their products. Given the increasing losses due to roof damage, gaining greater insights about the roofs being insured is crucial.
Imagine a scenario where an underwriter sitting in their office can view images of the roofs of the properties they’re insuring. Beyond aerial images, additional insights about the roof’s facets (different sections or sides of the roof), height, and area are considered for underwriting decisions. In a straight-through processing, especially for homeowner insurance, these insights can provide additional information for underwriting decisions and premium determination. If a referral to an underwriter is needed, they could examine the roof’s image for a manual decision.
All of this is becoming a reality now. There have been two notable developments in the past few months regarding underwriting insights related to roofs. Zesty.ai, an innovative digital company, offers a ‘Digital Roof’ solution that automates the assessment of roofs from aerial imagery. The use of AI and aerial imagery for property evaluation is on the rise. There’s more recent news about Zesty.ai as well:
Coterie Insurance’s Partnership with Zesty.ai: https://www.prnewswire.com/news-releases/zestyai-announces-agreement-with-coterie-insurance-to-deliver-property-risk-and-value-insights-301873579.html
Farmers Insurance’s Adoption of Zesty.ai Solution for Wildfire Risk: https://newsroom.farmers.com/2021-06-14-Farmers-Insurance-R-Adopts-Innovative-Technology-by-Zesty-ai-to-Increase-Homes-Eligible-for-Insurance-in-High-Wildfire-Risk-Areas-in-California
While these solutions might encompass more than just roof insights, the focus on roof insights is particularly intriguing due to the increasing losses from roof damage. This marks a shift from traditional data collection methods for underwriting and rating.
The question now is how “Insurance Policy Administration” systems are equipped to collect and incorporate these insights into their processes. While point solutions are important, integrating them with the policy administration process needs to evolve. As this evolution occurs, the functions and processes of policy administration are no longer limited to quoting, underwriting, and rating. They become powerful integration tools that offer additional insights during risk assessment. But it doesn’t end there—the insights obtained after risk assessment introduce new parameters for underwriting analytics, portfolio analytics, and product analytics. These AI insights also enhance claim processing by providing more accurate data. Aerial imagery of roofs during policy underwriting and claims for damages serves as valuable evidence for identifying potential fraud.
The power of AI has now reached at the roof top of insurance !
To know more about ‘Digital roof solution’ of zesy read this link https://zesty.ai/products/digital-roof
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