Aon has formed a strategic alliance with Zesty.ai, a San Francisco-based insurtech startup, which uses artificial intelligence (AI) to enhance insurers’ property underwriting.
Zesty.ai’s technology provides access to more than 130 billion data points on buildings and their surroundings which enables granular risk analysis and informed pricing, said Aon in a statement. AI is used to analyze regularly updated satellite and aerial imagery and other data sources – without ever setting foot on the premises.
Using Aon’s distribution network, insurers can evaluate their portfolio risk through Zesty.ai’s wildfire risk model and also obtain high fidelity property insights for underwriting both catastrophic and attritional (or non-catastrophe) risk.
Given the high price tag of some property exposures, it is important for insurers to be able to understand the risks they are underwriting, Aon indicated, pointing to the recent California wildfires that caused insured losses of US$16 billion in 2017 and up to US$18 billion in 2018 (according to statistics from Aon’s Impact Forecasting team).
Historically, wildfire has been challenging to model – a problem that is exacerbated by Fire Hazard Severity Zone maps, which tend to lack granularity on the physical attributes of properties, said Aon, noting that such granularity can help insurance companies more accurately price each risk.
Zesty.ai’s new wildfire model (Z-FIRETM) addresses this challenge by utilizing machine learning to combine vital property details – including vegetation, building materials, topography, weather patterns among others – with actual loss data. These factors at the individual property level create a predictive risk score, which provides a critical tool to evaluate risk.
Z-FIRE complements Aon’s U.S. wildfire catastrophe model from Impact Forecasting for reinsurance purchase and exposure management, Aon said.
Insurers can also leverage Zesty.ai’s Property Risk Analytics Platform to more accurately capture individual property characteristics. Homeowners’ data is often self-reported by the insured or derived through costly property inspections. Through Aon, insurers can now access Zesty.ai’s 130 billion data points on U.S. properties which are designed to easily integrate into existing systems and models.
Additionally, this collection process enhances the consumer experience by pre-filling key attributes and removing the need for research from the policyholder, the company added. Finally, the process equates to a tangible benefit of a clearer understanding of the insured portfolio while simultaneously decreasing loss ratios due to high fidelity data and expense ratios due to fewer physical inspections, Aon explained.
“Immediate access to new, usable and meaningful data insights is continuing to advance insurance underwriting,” said George deMenocal, president and U.S. CEO of Aon’s Reinsurance Solutions business.
“Instant insights on risk are becoming an increasingly important element for insurers as they modernize their underwriting platforms,” he added. “This technology evolution, coupled with new partnerships, brings opportunities for Aon to deliver new products that meet clients’ needs today and tomorrow, in a transparent and efficient way.”
Zesty.ai brings the latest technologies, such as AI, machine, learning and big data analytics to the property/casualty insurance industry, said Attila Toth, CEO of Zesty.ai. Zesty.ai was recently selected by Zurich Insurance from 459 global InsurTech startups as Silver Winner of the Zurich Innovation World Championship.
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