Among other things, insurance companies now use aerial photography, combined with AI, to better assess property-level risk. Here's an excerpt from Bloomberg Green:

“Weather and catastrophe losses are running ahead of the ability to manage them, and many insurers are having trouble sustaining their business because they’re not getting the right rates,” said Jay Guin, chief research officer of the extreme event solutions team at Verisk, a catastrophe modeling firm. “AI changes the equation.”

Zurich Insurance Group AG, one of the largest insurers in Europe, uses AI powered risk-modeling software to assess catastrophe risk and often tweaks it for its own purpose.

“If there’s fire hazard like vegetation, overhang or debris in your backyard that shouldn’t be there, we can tell you to lower the risk otherwise we may not be able to underwrite you,” said Ericson Chan, chief information and digital officer of the Swiss company.

What AI allows is a level of granularity that just wasn't possible when humans were the ones who had to do it. Insurers now talk about "continuous remote risk monitoring," meaning they can use AI-powered aerial imagery to constantly check on that risky debris in your backyard.

This feels like quite an improvement for the insurance industry. But when you more accurately price risk, I would imagine that it will lead to more insurers deciding to stay clear of certain risks and certain properties, as has already been the case in places like California.

Cover photo by Pim de Boer on Unsplash