According to the leader of ZestyAI, an AI-enabled property and risk analytics platform, the use of AI could significantly improve liability and casualty (P&C) underwriting operations.
In a recent discussion with McKinsey, ZestyAI executives noted that an insurer’s ability to accurately estimate, price and mitigate risk is core to its value to the market.
AI is currently battling a new set of challenges that disrupt traditional risk approaches. Specifically, climate risk is reaching new levels as ongoing floods, wildfires and other catastrophes erode insurance possibilities and widen gaps in protection for affected communities. The level of urgency has been reached, officials warned.
When asked how AI can help property and casualty insurers, and what the limits are, ZestyAI co-founder and chief product officer Kumar Duvr commented: As other carriers cede market share, forward-thinking companies will be able to protect their market share and capture some of the profits by leveraging models that better manage risk. Clearly, AI is a key enabler. But at the end of the day, it’s all about a better risk splitting model and that’s why they can get their value. “
Attila Toth, co-founder and CEO of ZestyAI, said the industry should focus on value, not nice-to-have R&D, secondary risk reviews, and process efficiencies. pointed out there is.
“We are moving AI into the core of our business of underwriting and ratings, averting billions of dollars in losses as an industry. Proving and realizing its value is critical,” she further commented.
Duble added that AI can not only help set better rates, but also improve segment risk. “But the question is, what do you do with that insight? That’s it.
“So if you really want to reduce systemic risk instead of splitting it up, you also need to take steps to de-risk each property. I think AI can be very helpful here.”
Toth added, “As you know, a lot of public and private funding is aimed at climate risk mitigation. Given the amount of money available, we need to ask ourselves: How can that money be spent most efficiently? AI will play a huge role in understanding vulnerabilities.”
