The hurricanes of 2024, such as Helene and Milton, have highlighted the devastating impact of extreme weather events and urged insurance providers to rethink how they manage risks. Hurricane Helene, which heavily impacted North Carolina, caused widespread damage across 39 counties, affecting numerous small businesses and displacing over a million people. The recovery efforts were substantial, with the National Guard delivering more than 13,500 tons of aid and assisting in the restoration of vital infrastructure like water and electricity.
Similarly, Hurricane Milton wreaked havoc across Florida, including cities like Tampa and St. Petersburg. Milton underscored the vulnerability of homeowners and small businesses, many of which experienced prolonged closures and financial difficulties due to severe flooding and power outages.
Given the increasing frequency of such catastrophic events, it’s no surprise that 25% of Property and Casualty insurers in the United States are incorporating AI into their strategies to improve prediction and management of extreme climate risk insurance. This finding comes from a survey conducted by ZestyAI, a provider of climate and property risk analytics, which interviewed 200 leading insurance executives.
Riding the Storm: How Insurers Enhanced Their Response to Major Climate Events
AI’s role in assisting both customers and insurers with catastrophe risk management has become essential. After hurricanes like Helene and Milton caused massive destruction in the Southeast, insurers needed to act quickly. Leveraging AI, many successfully handled over 400,000 claims, as reported by Florida’s Office of Insurance Regulation. By using AI to predict storm impacts and expedite claims payouts, climate risk for insurers were able to provide faster and more efficient services to their policyholders.
Here are some ways major insurance tech companies have embraced AI to improve their responses:
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USAA, an insurer serving military families, adopted AI-powered claims processing, drastically reducing the time it took to provide payouts to members. Drones were even employed to assess damage in hard-to-reach areas, speeding up inspections and repair efforts, ensuring that customers received assistance as quickly as possible.
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Zurich North America took a proactive approach by using AI-driven risk modeling to forecast the potential impact of hurricanes before they even made landfall. This foresight enabled them to mobilize emergency response teams and increase staffing ahead of the anticipated claims surge, ensuring they were fully prepared when disaster struck.
AI has already proven to be a game-changer in the way insurers handle catastrophe claims. For example, Zurich’s AI tool, CATIA, has revolutionized the claims process by quickly analyzing the causes of loss and claim descriptions, improving reinsurance recoveries.
According to Christian Westermann, Zurich’s Group Head of AI, CATIA combines traditional AI with generative AI, enhancing its ability to analyze complex claim data, even when the language used is unstructured or unclear. This innovation allows the system to better interpret nuances in claims data, improving efficiency in claims processing.
- Allstate also embraced AI by deploying virtual adjusters to assess catastrophe claims in real time. This not only helped prioritize urgent claims, ensuring quick responses to policyholders but also reduced operational costs, achieving a win-win outcome during some of nature's most challenging moments.
