AI adoption in insurance grows amid rising extreme weather risks  November 12th 2024

AI adoption in insurance grows amid rising extreme weather risks

As losses from extreme weather increase, insurers are rapidly adopting AI risk assessment models, with one in four now using AI for convective storms and 18% for wildfires, according to a recent survey by ZestyAI.

ZestyAI’s survey, which collected responses from 200 senior insurance leaders, explores how the industry is responding to the challenges posed by extreme weather.

The research revealed that stochastic models are the most popular approach for assessing storm risks, with 45% of respondents citing them as their preferred tool. For wildfires, 54% favour traditional actuarial models based on historical data.

FEMA: Over 72,000 NFIP flood insurance claims filed in Florida from recent hurricanes

The latest data reported by the U.S. Federal Emergency Management Agency (FEMA) states that across hurricanes Debby, Helene and the most recent Milton, more than 72,000 National Flood Insurance Program (NFIP) claims have been filed so far.

One month after hurricane Helene, FEMA reported that more than 54,000 claims had been filed by NFIP policyholders for that specific storm.

It was a particularly high level of NFIP claims for any major flood event caused by a named tropical storm, as for comparison FEMA had made 47,000 claims payments for 2022’s hurricane Ian, an event that resulted in over $4.5 billion in losses to the NFIP.

However, that figure of 54,000 NFIP claims for Helene was across the entire footprint of the storm’s flood impacts, which had extended through multiple states from its landfall in Florida right up to the devastating flooding experienced in western North Carolina.

Now, one month after hurricane Milton, FEMA has provided an update but unfortunately has not broken out NFIP claims for that storm specifically.

Instead, FEMA has provided an update on NFIP flood insurance claims filed across three hurricanes that caused some impacts in Florida over the season so far, hurricanes Debby, Helene and Milton.

New insurance company aims to address a concern that leads to 90% of business closures: 'Less waiting, less uncertainty'

New AI-driven insurance platform GridProtect is helping businesses recover quickly from weather-related power grid failures — which are happening with increasing frequency because of the escalating climate crisis.

Since 2000, 80% of major power outages in the United States can be attributed to weather-related events, and the frequency of grid failures is on the rise. Power outages in the U.S. cause $150 billion in losses annually, per FinTech.

Run by Montauk Climate, a leading incubator focusing on climate technology, Adaptive Insurance aims to use GridProtect to provide quick financial assistance to businesses immediately following a power outage. Traditional insurance plans require a 24-hour waiting period for activation.

"Climate and weather events cause $1 billion in damage every three weeks in the U.S.," said Philip Krim, founder and partner at Montauk Climate. "We launched Adaptive to address this immense and growing problem with a novel approach that is both effective and scalable."

Using artificial intelligence and climate data, GridProtect will be able to offer individualized parametric insurance solutions as soon as an outage happens.

Brava Announces Investment from Golden Gate Capital to Accelerate Growth

Brava Roof Tile (“Brava”), the leading independent provider of composite roofing materials in the U.S., today announced an investment from Golden Gate Capital, a San Francisco-based private equity firm. Brava’s management team, including Chief Executive Officer Adam Brantman and Chief Manufacturing Officer Andrew Ahrens, will continue to lead the Company and remain significant shareholders after close. Brava will remain headquartered in Washington, Iowa. Financial terms were not disclosed.

“Brava is a true industry disruptor and the clear supplier of choice for premium composite roofing products”

Founded in 2008, Brava is a leading manufacturer of high-performance, compression-molded roofing tiles that are created from recycled materials and deliver architecturally pleasing, durable and cost-competitive solutions to homeowners. Brava’s durable roofing materials can withstand even the most extreme weather conditions and have best-in-class hail and fire resistance. As a result, homeowners are protected with a safer, longer-lasting roof, better insurance coverage, and lower maintenance costs, when compared to traditional roofing materials.

Building in resilience for an uncertain climatic future

The US is facing a property insurance crisis for many homeowners struggling to access the cover they need. In the face of rising losses from natural catastrophes such as wildfire and flood, premiums have risen significantly while some insurers have withdrawn from the market altogether. It’s why actions such as a more stringent enforcement of building codes and homeowners adapting their homes to better withstand greater climatic risks are critical in the journey towards a sustainable and affordable property insurance market.

Standing alone in the charred devastation of last summer’s fires on the Hawaiian island of Maui which all but destroyed the town of Lahaina, a single house remained almost untouched. At over 100 years old, 271 Front Street became known as the ‘miracle house’ for surviving the wildfires. But it’s a miracle that can be explained by steel and stone, specifically the fire prevention measures the owners installed when undertaking a major renovation a few years prior which included a commercial grade steel roof, as well as stone-based landscaping around its perimeter.

“This house is a powerful symbol of what can be done to protect homes from natural catastrophe risk such as wildfire,” says Hiscox’s Joseph Pennyfather, Binding Authorities Line Underwriter. “And given the US P&C results in recent years, whether it’s retro fitting old houses or ensuring building codes have risk mitigation measures baked in, the sustainability of the household insurance market in the US depends on concerted action to help build in greater resilience to meet the growing challenge of climate change.”

“These factors are combining to force some insurers to reduce their exposure, push up prices, or even withdraw altogether from natural catastrophe exposed risk for home owners,” says Pennyfather.