Most policy administration systems are designed for the living. They operate under the assumption that the people in the system remain alive, contactable, and actively engaged with their coverage. But when a policyholder passes away and that information doesn’t flow into the insurer’s systems quickly (or at all), a chain of operational, financial, and risk exposure consequences can unfold.

This isn’t an obscure edge case. It’s a real, measurable source of hidden risk that impacts underwriting precision, claims integrity, portfolio exposure, fraud susceptibility, and customer experience. What’s more, many carriers still rely on reactive, outdated, or incomplete data sources to detect these events — if they detect them at all.

This article will explore:

• The role of advanced data intelligence
• Why the death of a policyholder matters in P&C insurance
• The specific exposures carriers face when this event goes undetected
• How early mortality awareness changes outcomes

Why the Death of a Policyholder Matters in P&C Insurance

At first glance, it might seem counterintuitive — why would a policyholder’s death matter in personal lines P&C coverage? After all, P&C products insure things like homes, autos, and property liability, not human life.

But the reality is this: P&C systems and workflows are deeply dependent on accurate, current information about the people they cover. Policy terms, underwriting assumptions, occupancy classifications, exposure calculations, renewal decisions, and even risk tolerances can hinge on who owns the property and its contents, how the property is being used, and whether contractual obligations are still aligned with the risk profile.

When a policyholder dies, several things can change rapidly:

• Insurable interest in both the property and its contents may shift (e.g., to heirs, trusts, or estates)
• Occupancy may change (e.g., an inherited home becomes rented, vacant, or unoccupied)
• Contact information may become invalid or outdated
• Claims activity may include losses unrelated to current risk profiles

If those transitions are not reflected in the insurer’s systems, carriers may unknowingly underwrite, price, or pay claims based on outdated or incorrect assumptions.

For example, a home insured as a primary residence under one set of risk assumptions may become a long-term rental with an unknown tenant and occupancy profile after the insured’s death — yet the policy remains priced, structured, and administered as if nothing changed. That’s a recipe for unexpected losses.

The Hidden Risks of Life Events That Go Unnoticed

Let’s unpack some of the most common and costly scenarios carriers face when a death goes undetected within P&C systems.

1. Claims Paid on Invalid or Outdated Policies

One of the most direct financial exposures occurs when policies continue under outdated underwriting assumptions. If the insured’s death isn’t known, the policy may remain active, coverage continues, and claims are processed normally — even though the risk profile has fundamentally shifted.

This can lead to:

• Claims paid on coverage that should have been suspended
• Policies remaining in force without valid insureds
• Inaccurate reserve estimates
• Distorted loss ratios

For carriers operating in catastrophe-prone states — such as Texas, Florida, or California — those exposures are amplified. A hurricane, wildfire, or severe weather event impacting a large number of properties can trigger a surge of claims, some tied to policies that should no longer have been in force.

Without timely awareness of death, underwriting and claims teams are left reacting — often too late — instead of managing risk proactively.

2. Misclassified Property Use After Death

Behavioral and usage changes after a policyholder’s death are another source of hidden exposure.

Consider this common pattern:

1. A homeowner passes away
2. The property is inherited
3. Heirs rent it out or leave it vacant

These changes in use and occupancy profoundly affect underwriting risk. A home occupied by its owner generally presents lower risk than one that’s rented or vacant. Vacancy, in particular, is especially correlated to higher claims frequency due to things like theft, vandalism, unnoticed water damage, etc.

If a carrier doesn’t know these changes have occurred, they can:

• Underwrite and price the risk inaccurately
• Assign incorrect risk classifications
• Miss opportunities to adjust coverage or offer tailored product options

In these cases, the lack of timely life event awareness creates exposure that compounds over time.

3. Fraudulent or Misrepresented Claims on Inherited Personal Property

When heirs or third parties interact with a policy after the insured’s death, there’s a risk of fraudulent or misrepresented claims, particularly for personal property.

Without accurate data about death and ownership transitions:

• Claims may be filed on items that are not verifiable
• Inventories and loss values may be inflated
• The carrier may pay on claims that would not have otherwise been submitted

These types of claims erode profitability and create friction within claims operations. More importantly, they drain resources and can undermine confidence in internal fraud detection processes.

Accurate, timely death awareness gives claims teams a contextual trigger to review and validate claims before payment, helping prevent improper payouts.

4. Unnecessary Blanket Cancellations or Non-Renewals

In regions with known risk concentrations — particularly areas with large senior populations and higher mortality rates — carriers sometimes resort to broad cancellations or non-renewals as a risk reduction tactic.

Unfortunately, blanket actions like these can:

• Increase regulatory scrutiny
• Erode consumer trust
• Disrupt legitimate coverage
• Impact market conduct evaluations
• Create volatility in reported reserves

The root cause isn’t always lack of underwriting discipline — sometimes it’s simply lack of situational awareness.

With accurate, early death data, carriers can manage these decisions with precision, targeting only the accounts that warrant review, rather than sweeping entire populations.

Why Traditional Data Sources Fall Short

Why do so many carriers struggle with these issues in the first place? The short answer: most P&C systems rely on reactive, incomplete, or infrequently updated sources of life event data.

Common mechanisms for death awareness include:

• Internal customer service updates
• Returned mail or undeliverable contact information
• Policyholder outreach
• Periodic public record checks

These methods suffer from one or more limitations:

• They are reactive, not proactive
• They may lag the actual event by weeks or months
• They miss events that never generate a service interaction

In other words, carriers often only discover the life event after the downstream consequences have already unfolded — when a claim is submitted, a premium billing fails, or a customer service interaction reveals outdated information.

Another underlying challenge is data quality. Even when insurers attempt to match policyholder records against external data sources, incomplete or inconsistent information can prevent accurate identification.

Participant and policyholder records frequently contain gaps or inconsistencies such as:

• Missing Social Security numbers or dates of birth
• Name variations, including nicknames, maiden names, or spelling errors
• Outdated addresses
• Data entry mistakes

When key identifiers are missing or incorrect, even well-designed death audit processes can miss critical matches.

Addressing this challenge requires more than traditional data matching — it requires more complete data and earlier, more reliable event detection. That’s where The Berwyn Group steps in: helping P&C insurers close this visibility gap with more accurate and timely mortality intelligence.

Turning the Problem into a Strategic Advantage

The solution isn’t simply more frequent manual checks or broader data pulls. It’s about combining a richer universe of data with intelligence that can detect events earlier and more reliably. That’s where advanced death intelligence and population data management comes into play.

At The Berwyn Group, the CertiDeath^® solution is designed to provide:

• Earlier mortality detection — often within five to seven days of the event
• Access to a proprietary database of confirmed deaths sourced from tens of thousands of structured and unstructured sources
• Actionable alerts that integrate directly with underwriting, claims, compliance, and policy administration systems
• Precision that supports operational decisions, risk management, and exposure control

While CertiDeath^® delivers critical mortality intelligence, many organizations also look to complementary data quality practices, such as Data Cleanse and Location Services, to help maintain accurate and up-to-date policyholder records. This transforms what was once a blind spot into an area of risk intelligence.

The Scale of Missing Data in Practice

Recent analysis from CertiDeath^® client data highlights the scale of missing or incomplete key policyholder data. In 2025, 73.6% of CertiDeath^® accounts loading files were missing at least one key data element — Social Security number, name, date of birth, or location — across more than 1,553 organizations. Closer examination reveals several common patterns:

• 21% of accounts were missing Social Security numbers, affecting an average of 9.1% of records per account, representing roughly 5.3 million records
• 38% of accounts were missing dates of birth, impacting an average of 6.4% of records, or approximately 1.6 million records
• 66% of accounts were missing ZIP codes, affecting an average of 11.3% of records, totaling more than 17.6 million records

When these foundational data elements are incomplete, the ability to detect life events — including deaths — becomes significantly more difficult. The result: delayed awareness, missed matches, and greater exposure to the downstream risks described earlier. That’s a risky position for any insurer.

How Early Detection Impacts Key Functions

Recent analysis from CertiDeath^® client data highlights the scale of missing or incomplete key poLet’s look at how earlier mortality intelligence tangibly improves key insurance functions:

Underwriting

• Improves risk classification and pricing accuracy
• Reduces exposure from policies that are no longer aligned with actual risk
• Supports portfolio risk segmentation with cleaner data

Claims

• Flags situations where claims may be inappropriate or require review
• Reduces improper payouts on invalid policies
• Supports fraud detection workflows with contextual triggers

Operations

• Enhances contact data accuracy
• Improves renewal and retention strategies
• Reduces operational inefficiencies caused by outdated records

Compliance

• Reduces audit risk tied to improper policy treatment
• Helps satisfy regulatory expectations for data quality and accuracy

Real-World Impact: What Leading Carriers Are Seeing

Carriers that have integrated early mortality intelligence into their workflows through advanced data sources report:

• Fewer claims paid on invalid policies
• More precise underwriting risk assumptions
• Fewer unnecessary cancellations and non-renewals
• Higher quality data for modeling and forecasting
• Improved operational velocity and lower administrative cost

These outcomes matter in a market that demands profitability, efficiency, and confidence in decision-making.

Conclusion: Closing the Blind Spot in P&C Insurance

In P&C insurance, even small gaps in information can cascade into larger operational, financial, and risk exposures. Missed life events — such as the death of a policyholder — impact underwriting accuracy, claims integrity, portfolio exposure, and overall operational efficiency.

Most policy administration systems weren’t designed to detect these events, and traditional data sources are often reactive, incomplete, or slow. Advanced mortality intelligence, like The Berwyn Group’s CertiDeath^®, provides timely, actionable insights that allow carriers to respond proactively, maintain portfolio integrity, and reduce hidden exposure.

Closing this blind spot isn’t just a technical upgrade — it’s a practical step toward more informed decision-making across underwriting, claims, compliance, and operational functions. In a market defined by precision and accountability, staying ahead of these events ensures that carriers can manage risk effectively and maintain confidence in every decision they make.

Learn more about The Berwyn Group and the solutions they provide to AAIS Members at berwyngroup.com.

The post Closing P&C Insurance Blind Spots with Mortality Data first appeared on AAIS.

The Evolving Landscape of Homeowners Insurance

The homeowners insurance market is under intense pressure due to a combination of factors:

• Population Shifts and Real Estate Development: Growing populations and new developments in high-risk regions exacerbate underwriting difficulties.
• Unpredictable Weather: Increased frequency and severity of weather-related events make risk prediction more complex.
• Market Disruptions: Factors like social inflation, macroeconomic pressures, rapid innovation demands, and heightened competition are intensifying the strain on insurers. Litigation management costs surged 19% from 2018 to 2023 for the combined P&C sector, reflecting an approximate $24 billion loss adjustment expense (LAE).

These issues are compounded by a surge in consumer insurance shopping, a rise in higher-risk policies, and an increase in long-time policyholders switching carriers. Insurers are forced to make tough choices, such as raising premiums, exiting markets, or discontinuing certain coverage lines. These pressures are preventing the industry from achieving necessary positive outcomes critical for future profitability.

The Burden on Underwriters

Amid the ongoing market uncertainty, underwriters particularly are facing significant challenges:

• Overwhelming Submission Volume: An influx of submissions strains underwriting resources.
• Inaccurate Risk Prediction: Traditional methods based on demographic data and zip codes are proving to be inadequate, necessitating more precise risk assessment tools.
• Data Quality Issues: Poor-quality or unstructured data and manual processes further complicate risk assessment.

Underwriters are questioning why the process is so burdensome and how it can be alleviated. The crux of the issue is underwriting profitability, crucial for maintaining healthy bottom-line results. Fortunately, there are modern solutions to address these goals.

Modernize Risk Assessments with Behavioral Predictions

Traditional underwriting relies heavily on demographic data and location. Enhanced risk assessment goes beyond traditional methods such as ZIP Codes and credit scores by incorporating individual behavior and decision-making patterns.

Underwriters today can access a wealth of data outside traditional risk variables to deepen the understanding of their policyholder’s risk profile. By utilizing AI-powered behavioral predictions, which incorporate information about consumer activity, interests, buying choices, etc., underwriters can more accurately predict outcomes relevant to insurance underwriting performance.

To remain competitive, insurers must invest in this digital transformation and reduce reliance on complex, manual processes. In fact, a McKinsey analysis found that the most successful carriers are those leveraging the latest technologies to optimize underwriting capabilities. Enhanced approaches for success involve adding:

• Comprehensive Risk Profiles: A detailed view of prospective and existing policyholders to start transforming underwriting workflow.
• AI and Person-Level Insights: Using AI to access powerful person-level insights about customers and their individual risk propensities, which directly impact underwriting profitability.

Leveraging Behavioral Predictions Across the Insurance Value Chain

Using behavioral intelligence represents a transformative shift in insurance underwriting. By incorporating policyholder behaviors into risk evaluation, insurers gain a deeper understanding of risk profiles and individual customer nuances, leading to a more customer-centric approach to coverage. This intelligence offers specific predictions that enhance risk assessment:

• Identifying policyholders with a high propensity to seek an attorney at first notice of loss (FNOL) or a likelihood to litigate.

• Predicting claims frequency and severity for current policyholders and prospective customers.

• Assessing the likelihood of non-payment or early cancellation.
• Determining which prospects are most likely to convert to new customers and predicting their lifetime value.

When insurers identify policyholders with a higher propensity for risk, they can proactively manage these policies more precisely using unique identifiers. Meanwhile, they can handle other policies based on different qualifiers that indicate varying levels of risk. This becomes a game-changer for insurers’ ability to predict and review for underwriting.

Empowering Underwriters

Underwriters are tasked with building profitable books with targeted risk profiles. To be successful, they need to make quick, effective, and accurate assessments of the profitability of each policyholder. However, they are often working with limited or convoluted information and are under considerable time constraints.

Utilizing person-level intelligence in underwriting allows underwriters to focus their craft and expertise on the most complex risks. By integrating person-level intelligence, insurers can:

• Identify High-Risk Insureds Early: Early identification of high-risk individuals allows underwriters to focus on the most complex cases, improving resource allocation.
• Improve Efficiency: With simply using a name and address, significant risk insights can be obtained in seconds.
• Enhance Risk Handling: Focus on complex cases while automating the handling of low-risk applications, improving overall workflow efficiency.
• Provide Personalized Service: Offer coverage tailored to individual risk profiles, moving beyond traditional factors like location and credit scores.

Future-Proofing Insurance Underwriting

For P&C insurers, integrating person-level intelligence into underwriting processes offers a more precise and complete view of the policyholder risk profile. This approach helps insurers better prepare for uncertainty, respond to market volatility, avoid adverse selection, and achieve profitable, sustainable growth. These AI-powered behavioral predictions empower insurers to:

• Predict and Manage Risks More Accurately: Identify high-risk individuals earlier and adjust policies accordingly.
• Enhance Customer Understanding: Gain insights into customer behavior, such as propensity to litigate or likelihood of early cancellation, improving risk management strategies.
• Improve Underwriting Profitability: Achieve more accurate risk assessment and better manage underwriting resources, contributing to healthier bottom-line profitability and sustainable growth.

Using Advanced AI Risk Assessment with Pinpoint Predictive

A more comprehensive and inclusive risk assessment requires a deep understanding of the individual behind the policy, as well as incorporating insights into an insurer’s decision-making processes as part of risk analysis.

Pinpoint Predictive empowers underwriters by enabling them to make smarter, more equitable assessments of risk, accurately identifying high-risk and low-risk individuals. This enhanced accuracy in underwriting workflows helps insurers better serve their customers by identifying and quantifying individual risk earlier and more accurately.

By bridging the gap between the most powerful behavioral predictions made by the world’s leading tech companies and the specialized requirements of the insurance industry, Pinpoint is delivering unmatched risk-selection capabilities at various points along the insurance value chain.

Conclusion

The homeowners insurance sector faces unprecedented challenges. Behavioral intelligence, centered on individuals, represents the next generation of technology, transforming policyholder risk assessments and offering insights into future customer risks. As the industry adapts to these new technologies, the focus will shift toward more informed, efficient, and customer-centric underwriting practices, paving the way for a more resilient and profitable insurance market. Insurers that integrate these advanced risk assessment tools and insights will ultimately be the most successful in enhancing their underwriting processes, addressing the evolving risks associated with new developments and weather events, and ultimately improving financial outcomes.

Improve your Underwriting Outcomes with Pinpoint

With predictions available earlier and more accurately than any other risk solution on the market, Pinpoint is transforming the P&C insurance industry and helping underwriters drive better outcomes with an AI-powered, real-time solution for precise risk selection. For more information about how Pinpoint can help you, visit www.pinpoint.ai or contact info@pinpoint.ai.

The post Addressing Homeowners Underwriting with Behavioral Risk Predictions first appeared on AAIS.

The AAIS white paper, Solar Panels: Don’t Be Left in the Dark, dives deep into the dynamics of solar panel adoption, the technology behind it, and, most importantly, the insurance considerations that come with it. This comprehensive research provides a thorough analysis of current insurance practices, potential risks, and the evolving coverage options for solar panel installations.

Key highlights include:

• Current Adoption Trends: Insights into the rapid growth of solar panel installations and regional variations
• Technology Breakdown: How solar panels work and what components are involved
• Insurance Coverage: Detailed examination of how solar panels are covered under various insurance policies, including common exclusions and potential gaps
• Claims Data Analysis: An exploration of recent claims related to solar panels, including fire risk and damage from hail and windstorms

Whether you’re an insurer looking to refine your policies or an insurance professional aiming to stay ahead of industry trends, Solar Panels: Don’t Be Left in the Dark offers valuable knowledge to ensure you’re well-prepared for the solar revolution. This is an excellent opportunity to enhance your understanding and better adapt to the changing landscape.

Click below to download your copy.

The post Solar Panel Adoption: Impacts on Homeowners Insurance first appeared on AAIS.

The Relationship Between Reinsurance and Home Inspections

According to Kalisch, the relationship between reinsurance and home inspections boils down to the quality of the book of business that the insurance carrier maintains, as reinsurers always seek a healthy book. “If you have an inspection program within your underwriting guidelines, you are more apt to have a healthy book of business,” he explained. “This means that you have looked at these risks, assessed them, and made sure that they are acceptable for your own guidelines, which then helps reinsurance carriers feel more comfortable with writing your business.”

Biggest Oversight by Insurance Companies Seeking Reinsurance

Kalisch believes the biggest oversight for insurance carriers seeking reinsurance is not considering potential risks in their book. “They approach it with the mindset that the only concern is CAT (catastrophe) claims,” he said. “They think that’s the only thing reinsurance covers; however, they don’t realize that there is a myriad of other claims that can impact how reinsurance carriers look at them.” For example, if many roofs in an insurer’s book of business are beyond their age guidelines or in poor condition, Kalisch warns they will be the first affected by a hurricane, even a small one, as large hurricanes don’t impact new roofs the same way they do old ones. “If you are doing inspections [and] maintaining a healthy book of business, when reinsurance companies look at you, they will see your ability to maintain a small storm and maybe will have to pay for a larger one. This provides a level of comfort when they assess your book and the risk they are taking on.”

About Chrp Technologies

Chrp Technologies is an AI-based loss prevention program deeply rooted in construction and underwriting expertise. Developed using claims data, 20 years of underwriting data, and on-site experience observing the cause and effect of potential losses, it features proprietary AI designed to identify and mitigate risks for carriers. This scalable solution enhances the profitability, expertise, and efficiency of underwriting departments, according to Kalisch.

How AAIS Members Can Leverage Chrp Solutions

The easiest way to benefit from Chrp is to reach out and schedule a demo. “The way this product is set up is to help underwriters,” Kalisch stated. “It’s very easy to use and get into the process. Start with basic loss assessments; find things that you’re missing on a regular basis that traditional inspections are not doing for you. Give your homeowners and policyholders the option to be able to conduct their own [inspections] in a safe environment and use the analysis that comes back from years of industry experience to be able to assess the quality of the business.”

Learn more at chrptech.com.

To view the full interview with Micah Kalisch, click on the video above.

The post AI Home Inspections: Enhance Loss Prevention and Reinsurance first appeared on AAIS.

One challenge to maintaining a healthy book of business for carriers is that their margins are too thin to inspect every property. This is why property insurers use a variety of data sources to understand the risks both inside and outside the home, such as:

• predictive analytics for non-catastrophe (non-CAT) water and fire risk;
• roof scores to assess roof condition;
• building characteristics and permit data; and
• traditional loss control inspections.

While these data sources are a great start, they fall short because they don’t identify specific failure points inside a home or determine a home’s overall condition.

Small Issues Lead to Big Claims

Chrp Technology’s analysis of claims data has shown that small issues can lead to big losses. For example, did you know one of the biggest drivers of non-CAT water losses in homes (both old and new) is related to a plastic coupler nut located under a toilet’s tank? Even though the nut says, “install by hand,” these nuts are often tightened using a wrench or pliers. This improper installation causes ripples or cracks in the nuts, accelerating their deterioration and leading to claims. Recently, a carrier we spoke with suffered a $1.5 million claim from a $2.50 nut. Advances in AI can now estimate the lifespan of components inside and outside homes which may lead to non-CAT water and fire claims.

As personal lines property insurers grapple with securing reinsurance capacity, some carriers are using AI-based home health assessments to flip the script on traditional underwriting methods by proactively fixing issues and writing more low-risk policies focused on a home’s condition, rather than an arbitrary threshold (e.g., age of home).

By taking a more modern approach to underwriting through the use of AI-based home health assessments, carriers have been able to secure excess reinsurance capacity by fixing issues inside and outside of homes, capturing vital data points about properties, and making better underwriting decisions based on the home’s condition.

In the sections below, we’d like to show you how the next generation of AI and digital technologies is helping carriers in three key areas to maintain a healthy book of business and reduce their loss ratios.  

Risk Selection: A Picture is Worth a Thousand Words

Adverse risk selection plays a vital role in minimizing losses. However, insurers cannot do much regarding catastrophic claims. All they can do is perform their due diligence and spread their risk to minimize losses.

Non-CAT water and fire claims are a different story. Now, more than ever, underwriting is under pressure to avoid as many of these claims as possible, and with good reason. Our analysis has shown that eight out of the top 15 issues leading to claims are related to basic plumbing issues.

AI and digital technologies make it possible to identify non-CAT water and fire issues from cell phone imagery. By simply texting a link to a homeowner, carriers can walk a consumer through a guided self-inspection of their home. After capturing the imagery, AI can analyze the photographs pixel by pixel to assess the condition of 250 subcomponents inside and outside of a home.

Every carrier has hundreds—or even thousands—of minor issues (which are easy to fix) in their book of business. AI can alert underwriters about these issues to help carriers:

• reduce losses by identifying symptoms that lead to claims; and
• increase policyholder retention by creating programs that help customers maintain healthy homes.

By proactively identifying and resolving maintenance issues early in the underwriting process, our carrier partners have reported a 5 to 10% decrease in annual loss ratios and up to a 12% increase in renewals.

Underwriting Efficiency: Finding Needles in a Haystack

Traditional loss control inspections can be very helpful in mitigating risk, but they are geared towards the home-buying experience rather than insurance underwriting. Reviewing an inspection to identify hazards that could lead to a claim is like finding a needle in a haystack. It can take an underwriter 20 to 30 minutes to review a single report, which is neither scalable nor cost-effective.

AI has evolved over the last few years from identifying objects (e.g., type of water heater or appliance) to assessing the condition of homes and identifying potential issues.

By highlighting the issues found and putting them on top of home health assessment reports, underwriters no longer need to dig through reports to take action. This can reduce the time it takes to review an individual report from 20 to 30 minutes to under 1 minute. In addition, carriers can create unique underwriting guidelines and workflows based on the health of a home (unhealthy vs. healthy).

For example, healthy homes with no issues can be automatically moved down the underwriting chain.

For new business submissions or renewals with minor issues, underwriters can let consumers know that they noticed a few small problems, but if the consumer can fix them, they’d be willing to work with them.

Finally, for policies with major hazards, carriers can automatically send reports to agents and homeowners to let them know they don’t provide coverage for renovations, or their roofs need to be fully replaced. 

Claims Prevention: Little Things Can Make a Big Difference

An ounce of prevention is worth a pound of cure. While some claims are inevitable, many others are preventable.

It’s been estimated that in 2024, one in 60 homes will file a water damage claim.¹ Our analysis of claims data has shown that little things can lead to big claims. For example, did you know the second leading cause of water claims is related to water supply lines?

Around 30 years ago, manufacturers of stainless-steel supply lines started using surgical rubber tubing wrapped in stainless steel braids to improve supply lines’ aesthetics and to reduce costs. Unfortunately, manufacturers didn’t consider the reaction between chromium in the steel braids and the chlorides found in most household cleaning products. These chlorides can strip away steel’s protective properties, leaving behind iron strands that are susceptible to rusting and fracturing over time. Once braids begin to weaken, it’s only a matter of time before the malleable rubber pushes through an opening in the braiding and bursts like a balloon, leading to a water claim.

Home electrical fires are another example of minor issues turning into big claims. Electrical fires cause an estimated $1.3 billion in property damage each year.²

One of the benefits of AI-based home health inspections is that they can identify issues related to water and fire claims, such as:

• rusting and pitting on supply lines;
• exposed wires under sinks; and
• recalled electrical panels and breakers.

If a traditional home inspection catches any of these issues, it can take 20 to 30 days for it to reach an underwriter. The turnaround time with AI-based home health assessments is much faster at five to seven days, allowing underwriters to work with insureds and agents to fix any issues, avoid unnecessary claims, and create healthier homes.

Gaining Reinsurance Confidence with AI
Loss control in commercial lines property is a mature capability. Some would even
argue that loss control engineers at companies like FM Global know more about the facilities they insure than the employees who work in them.

Unfortunately, due to razor-thin margins in personal lines property, carriers had to be selective about the properties they inspected and how they inspected them. AI and digital technologies can now help carriers gain vital information about the inside and outside of homes in a scalable and cost-effective way.

The advancement of AI and digital technologies couldn’t have happened at a better time as one of the first questions reinsurers and brokers ask carriers is, “What is your loss ratio and how healthy is your book of business?” By capturing vital data about policies and fixing potential issues, carriers can provide insights about the number of homes with roofs under ten years old and other valuable data points to gain reinsurer confidence.

Going forward, we believe carriers who leverage AI-powered home health assessments will have a much easier time securing reinsurance capacity and will gain a competitive edge by writing more profitable new business and renewals.

About Chrp Technologies

Chrp Technologies helps home insurance companies build great relationships with their insureds. Our proprietary AI products deliver loss prevention and enhanced customer experience. Learn more at chrptech.com.

Resources

¹Hattle-Cleminshaw, A. (n.d.). Smart home water monitoring devices prevent property damage. propertycasualty360.com. https://www.propertycasualty360.com/2024/03/26/smart-home-water-monitoring-devices-prevent-property-damage/

²NFPA report – home electrical fires. nfpa.org. (n.d.). https://www.nfpa.org/education-and-research/research/nfpa-research/fire-statistical-reports/electrical-fires

The post Can AI Home Health Assessments Boost Reinsurance Capacity? first appeared on AAIS.

Overview of Orion180 & Chrp Technologies

Orion180 is a technology-based insurance company that utilizes cutting-edge technology paired with outstanding customer service to simplify the insurance experience and enhance the customer experience. They are primarily HO3 in six southeast states but are beginning to roll out other products in more states. Chrp Technologies helps home insurance companies build great relationships with their insureds through proprietary AI products that deliver loss prevention and an enhanced customer experience. Chrp has seen tremendous success with clients like Orion180.

Finding Solutions by Utilizing AI Tools

Orion180 as a company focuses on three areas: efficiency, accuracy, and customer experience. “Our challenge was timely identification of risk and issues,” Wyrick shared. “Specifically, having inspections completed, allowing us time to review them, and giving the insured time to repair anything that we found had adverse conditions. So, we really needed to streamline that process to make it more efficient.” Accuracy is also extremely important to Orion180 because they base their outcome on the data that’s provided back to them from inspections. And, overall, the inspection process is a customer experience. What attracted Orion180 to Chrp Technologies was the ease of use and that it hit all three of the company’s focal points. “From an efficiency standpoint, it’s an automatic process,” said Wyrick. “You don’t have to manually order inspections, follow up, track, and keep all that data together. [The] AI built into the platform is accurate. We’ve gone from months of training time down to weeks. And if we have an issue, I know Chin and his team will be there on the customer experience side.”

Impact on Retention Rate & Policy Holder Engagement

Since partnering with Chrp, Orion180 has been able to retain its policies. “When we launched Chrp, our average date of a completed inspection returned was around 16 days,” Wyrick reported. “With all of the updates, we went from 16 days to now nine days completed and it’s still dropping. We’ve got drastically increased policy retention because we’re able to review those risks and provide those solutions and keep that policy.” Wyrick believes this process with Chrp has made policyholders more aware of their risk and its impact on insurance.

Overcoming Challenges

Being a company born out of Florida, Ma admits one of the biggest challenges for Chrp is that a lot of its customers are of an older demographic and do not feel they are tech-savvy enough to use the service. “So, one thing that we’ve put into place right away is a seven-day-a-week, 365 customer service model,” said Ma. “In our company, you go through a rite of passage called the legendary conversation.” This is essentially walking a customer through the inspection process and guiding them through the app. These conversations with customers influence the way that Chrp designed its application. “Those are the types of conversations and experiences that give us the opportunity to make improvements.”

Insight on How Chrp Works

Chrp complies with two mission statements: Eliminate Non-Cat Claims and Help People Have Healthy Homes. “Conducting inspections is [not] a new thing for the insurance industry,” Ma confessed. “But doing so the right way is incredibly important. Right now, the ‘right way’ also necessitates an economic model that works with an underwriting.” Being able to leverage self-inspections in concert with physical inspections, in a cost-effective way, is a huge plus in driving volume, according to Ma. Then, the correct symptoms that lead to claims need to be analyzed. “If you get those two things right, you should see a high inspection conversion, roughly between 75% to 85%, on the self-inspection side. Blended cost-wise, that can actually reduce your overall inspection cost,” he stated. Chrp delivers highly accurate AI to streamline what symptoms require underwriting action and also offer a solution to customers so they can prioritize their time. This leads to the end result, which is how to eliminate non-cat claims to ultimately improve profitability.

When the inspection report comes through to the customer, any adverse conditions that the AI has found are listed first. “We’re looking at those first before we even get through the rest of the inspection,” Wyrick shared. “That’s the efficiency aspect of [Chrp]; we can see right off the bat what’s wrong. If it’s bad enough, we’ll already know how this risk is going to end up.” But the best function of the Chrp platform in Wyrick’s opinion is the ability to escalate inspections. “If we have a reviewer that’s kind of guessing at something or if they have a question, they can escalate that inspection to a new cue, and myself or another senior member can go in to look and write our notes. Then it goes right back to that inspector.”

To view the webinar in its entirety, click on the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Werner Kruck
President & CEO – AAIS
wernerk@aaisonline.com

Chin Ma
President – Chrp Technologies
cma@chrptech.com

Brandi Wyrick
AVP of Experience – Orion180

bwyrick@orion180.com

The post Webinar: Leveraging Today’s Underwriting Technologies to Modernize Homeowners Insurance first appeared on AAIS.

“I’ve been getting out of the house more than ever with this new e-bike, have you considered getting one?”  

“Now that my solar array is complete, and I’ve connected the new 3000-watt home battery backup, I’m ready to go off-grid.”

The adage “home is where the heart is” speaks to our homes’ role in our lives. They are not simply our biggest investment, they are not simply an assembly of materials arranged in a shelter; a home is where our lives happen, where the people we care for coalesce. Increasingly, our homes are also where we store, charge, and use the multitude of battery-powered devices that we rely on for our work, our chores, and our leisure. A decade ago, the battery industry estimated that a typical household of two would have 20-40 (traditional removable) battery-powered devices. With the vast expansion and enhancements in battery technology, this number has grown exponentially. Nearly every household device now has a mass-market battery-powered version, and the remaining devices can typically be powered through large solar arrays and residential-scale energy storage systems.

With the rapid proliferation of battery-powered devices in homes (and businesses), we are hearing more frequently about the fire risks associated with these devices. Fires in modern battery-powered devices tend to be quite spectacular and cause considerable damage. The primary reason for this extreme fire behavior is Thermal Runaway – “a phenomenon in which the lithium-ion cell enters an uncontrollable, self-heating state. Thermal runaway can result in extremely high temperatures, violent cell venting, smoke, and fire.” (Source: UL Electrochemical Safety Research Institute). When confined inside a house, the thermal runaway from a small device can quickly transition to a fully involved structure fire. For NBC’s Today Show, UL conducted a full-scale demonstration of an e-scooter fire due to overcharging in a living room, dramatically demonstrating how quickly it can destroy a house.

Insurers have been working to understand this growing exposure. What the industry is learning is this exposure is not a narrow issue confined to one type of device or failure mechanism. The problem is multifaceted and complex, and this type of exposure is present in most homes (and businesses). But there are some common considerations and factors that increase the risk:

• Physical Damage or Destruction of the Battery – Many battery-powered devices are intended for hard work and rough play and consequently may crash, be stepped on, dropped from a height, pierced, submerged in water, or otherwise abused. Doing so can damage the battery components and disable safety features leading to overheating, short-circuits, and worse yet, thermal runaway.
• Resold or Refurbished Battery Components – The concern here is about used battery packs being resold from consumer to consumer when the provenance of the battery (and any potential damage, misuse, submersions, etc.) is unknown. This is even more problematic when advanced DIYers or unlicensed persons may have attempted to refurbish or modify battery components themselves. While there is a mature industry that tests, refurbishes, and resells used consumer electronic devices, the battery components themselves are best purchased new from a reputable source.
• Long-term and Unmonitored Recharging – Perhaps the most significant feature of any battery system is the ability to stop charging when it reaches its capacity. This technology has become so successful that we often put our devices on the charger and leave them there, figuring the device(s) are smart enough to shut themselves off when it is complete. This habit can result in fires when devices or battery packs are left on the charger for hours or days after they have fully recharged.
• Recharging Devices in Means of Egress – Very often the question about battery safety is more of a question of location—where is the battery being recharged? Many of the fatal fires associated with batteries have occurred when occupants—particularly in multi-story apartment buildings—have left micro-mobility devices (e-bikes, hoverboards, etc.) charging in hallways, stairwells, and doorways. If the device catches on fire it can block the primary means of escape for the residents, trapping them in the building or in their apartment.
• Batteries Inappropriately Disposed of in the Waste Stream – While typically less of a concern for traditional P&C carriers, another major fire source are batteries carelessly disposed of in residential trash waste streams. When compacted in refuse trucks or dumped into waste transfer stations, the residual “stranded energy” still contained within the batteries can start fires.

Communities across the country are working to reduce the prevalence of fires from battery-powered devices. New York City, which has seen a significant number of battery fires, instituted a series of regulations to reduce fires by prohibiting the sale of batteries that are not UL-approved and severely restricting locations where batteries can be refurbished or stored in large quantities (such as bike courier hubs), among other things. Other communities are following suit in passing regulations, increasing public awareness of battery fire safety, and developing effective strategies for suppressing and containing battery-caused fires.

But the challenge remains that many unapproved and unregulated devices are readily available for sale through online marketplaces, making it easy to sidestep local enforcement efforts. More places are providing safe battery disposal sites including big box stores and waste and recycling vendors (for the purpose of reducing the fire risk to their vehicles and facilities as much as for environmental stewardship), though many of these disposal sites explicitly prohibit disposing of batteries that have expanded, deformed, or are otherwise at risk of imminent catastrophic failure.

As the battery technology industry becomes more mature and more heavily regulated, we can expect to see more intrinsic safety measures built in and better ways to prevent the catastrophic failure of batteries. However, as the industry matures, it is also expanding exponentially with countless new technologies being introduced and novel energy storage devices being prototyped every month. So, the exposure is only anticipated to grow accordingly. Insurers need to have a seat at the table when the dinner conversation turns to fire risks from batteries. Because a modern home really is where the battery is.

The post Home Is Where the Battery Is first appeared on AAIS.

Overview of the Regulation

In October 2022, the California DOI passed the regulation requiring an insurer to offer specific mitigation factors. Westcott explained that the determination for whether this applied to consumers’ currently filed rate was whether they used the wildfire risk model, or the rating plan segmented a policyholder’s rate based upon the policyholder’s wildfire risk. “The regulation addresses two types of mandatory mitigation factors as well as the community level and property level mandatory mitigation factors,” Westcott described. “The property level factors cover mitigation measures addressing both the immediate surroundings at the structure, often referred to as ‘defensible space,’ as well as the buildings hardening measures performed on the structure itself.” The regulation further identifies some optional factors relating to wildfire loss that an insurer may incorporate into the rating plans as long as the resulting rate is not excessive, inadequate, or unfairly discriminatory. Westcott shared that throughout the regulation, there are administrative requirements an insurer must follow. “Many of the requirements are around transparency and providing information regarding the mitigation credits to your policyholders,” she said. In addition, each company is still required to make a filing even if your advisory organization has filed with the department.

Wildfire Mitigation in AAIS Manual

Linda Jancik explained that this regulation affected the homeowners by peril (HOBP) and homeowners by composite (HOC) programs at AAIS the most. Filings* were also done for agricultural output, commercial output, and inland marine guide-motor truck cargo. Wildfire risk mitigation credits are available in both California HOBP and HOC programs in the AAIS rule manual as separate rules. “The reason [for this] is that there are different ways of premium determination for these two programs,” Jancik explained. “Because in HOBP, wildfire can be isolated, whereas in HOC, their combined loss costs do not allow it to split up into individual programs.”

There are three categories of wildfire risk mitigation credits available: community coordination, property hardening, and defensible space. “Whereas the community coordination credit applies to the community you live in, property hardening measures, as well as defensible space measures, can be influenced by the policyholder,” said Jancik. “So, we can’t suppress our way out of wildfire.” She believes that communities that are coordinated, collaborative, and consistent in their wildfire mitigation efforts are likely to have lower losses and better outcomes. Property hardening measures relate to all building characteristics that help reduce wildfire risk. The risk of wildfire damage to buildings is also dependent on preventative measures such as ensuring that the area surrounding the building is clear of excessive flammable material and debris.

Rating Impact

For the community coordination credit, AAIS is proposing a 4% wildfire credit for being recognized in a FirewiseUSA site in good standing. “This 4% is larger than most of our other credits,” Mike Payne relayed. “We wanted to recognize that they have a lot of activities going on; they’re really committed. So, it was a little bit more robust.” In a California fire risk reduction community, AAIS is proposing a 1% credit. It’s a relatively new program, according to Payne, which is why it is different from the FirewiseUSA sites. “But these two pieces are technically mutually exclusive,” he added. “So, you could be in one or both of those types of communities [and] your maximum wildfire credit for community coordination would be 5%.” AAIS is proposing a 1% credit for each of the property hardening credit type activities (Class-A fire-rated roof, enclosed eaves, etc.) “It might seem small, but we really wanted to try and emphasize the fact that when you do more of these, they add up and you’ll get more of a benefit,” Payne explained. The same applies for the defensible space credit. “Again, assuming all five activities are met, you would get the 5% compounding impact and you add those together to get a total of 10% for maximum wildfire credit for defensible spaces,” said Payne. “If you add up those three components together, we are proposing a maximum of a 25% credit to the wildfire portion of the loss costs.”

Rethinking Consumer Notices & the AAIS Consumer Notice Tool

When discussing wildfire mitigation, one of the key factors that comes up is how to incentivize homeowners to take action. “The regulation that’s been put forth by CDI goes a long way to start driving change and homeowner behavior,” said Matt Hinds-Aldrich. “But we still need to instill a sense of urgency. [AAIS] discovered the importance of the consumer notice.” Because this regulation puts a lot of focus on actuarial analyses and being compliant with the law, the consumer notice tends to become an afterthought. “[AAIS] started realizing that there’s a real missed opportunity here,” Hinds-Aldrich claimed. “So, we spent time developing a consumer notice model.” In doing so, AAIS identified three key issues that needed to be addressed: comprehension, accessibility, and motivation aspects.

When creating the consumer notice sample, AAIS believed that if it was kept short, succinct, and relevant, homeowners would take full advantage of it. Information can either be put in manually through drop-down menus or in an automated fashion at scale. “Whatever the reading is, or variables that are selected, [the form] will automate all of the remaining information,” Hinds-Aldrich explained. The other component worth noting is that this form is entirely customizable by any AAIS member. “Everything can be changed from the colors to the verbiage,” Hinds-Aldrich shared. “[We] recognize that carriers are going to have to make their own choices and may have different variations when they do their own filing.” AAIS has also created a separate version of the consumer notice tool that allows companies that use catastrophic wildfire risk models to disclose the model that was used and how it operates.

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Linda Jancik
Product Manager – Personal Lines
lindaj@aaisonline.com

Mike Payne, FCAS, MAAA
Chief Pricing Actuary
michaelpa@aaisonline.com

Matt Hinds-Aldrich, PhD
Senior Risk Strategy Lead
matth@aaisonline.com

*Note that filings for these programs have not yet been approved.

The post Webinar: Making Wildfire Mitigation Meaningful: Addressing California’s Mandatory Wildfire Mitigation Credits Regulation first appeared on AAIS.

Trends in Commercial Property

Dunn started off the discussion by requesting overviews of what the panelist are currently seeing in the market. Coan explained that while inflation isn’t a new trend, COVID did have a larger effect than normal. One point that he likes to make clear, is that inflation is not one in the same. It is different regionally and by state. “Florida has a 7.14 average inflation rate across the state, but Fort Myers and Miami are both over nine,” Coan reported. “Fort Myers is over nine because of [Hurricane] Ian, and Miami is over nine because inflation is driven by the people who live [there].” When developing costs, Coan insisted that it is important to keep in mind regional costs all the way down to zip code and census block level. “When you’re underwriting, you need to understand that different regions are experiencing inflation and cost factors differently.”

Inflation is affecting every American and when it comes to the confluence of factors in the renewal books, Heine has noticed there tends to be a mismatch of pricing terms and conditions. “We’re urging our clients to take a good healthy look at the renewal book to make sure that they’re managing that risk,” he said. “When you’re adjusting values, you have to look at everything.”

Current Challenges and Actions Carriers Can Take to Address Them

Coan reported that more than 50% of homes are short to value. “These [catastrophic] losses all over the country have shown that no one has a book that’s a true value,” he emphasized. “Everyone thinks they have a book that’s insured to value, but you don’t. When you run books of business, you’re going to see the valuations of those books are more than 50% undervalued.” Coan admitted that this is a common problem, even more so on the commercial side. “They get looked at less often,” he stated, “and there’s less information that the carrier is getting from the broker or the agent to write those policies.”

Heine believes carriers are under great pressure due to the tightening capacity. “There are a lot more questions at the portfolio and individual property levels when it comes to the middle market and large commercial,” he said. “At that level of discipline, folks are able to show that they actually have a command over their book and a process to help manage that. Part of what we’re seeing is a gap in terms of what these folks are insuring for and what the reinsurers are looking at.”

In terms of action to help address these problems, Coan believes it starts with data and technology. “You need to have third-party data built in because you can’t have all the information on this risk,” he advised. “It has been proven that vendors like Betterview and e2Value can help adjust the data, dissect that data, and provide customers with really good information on these risks.” Coen stressed that it is important to take advantage of these advances in the marketplace. “If you’re not in a more digital world doing things like incorporating an API and pulling in real-time information so you can give a real-time solution, then you’re going to fall behind,” he claimed. “Everyone understands new technology, so the excuse that customers aren’t going to want to do that is not true. You need to bring in the right data to process your claims, your underwriting, and your submission policies.”

The Way Forward: Progress of Insurers & Technology/Data Working Together

The integration of new technology such as API has been helpful for companies like Betterview when it comes to strategy. “Resources are at a premium wherever you go and or customers were absorbing that,” Heine explained. “Now, it’s like someone flipped that discussion and we’ve decided to absorb that time, effort, and cost. Overall, technology has advanced the actual value of what folks can get over a period of time.”

While there may be some hesitancy to get involved with data and technology providers, especially from legacy carriers, Coan believes it will pay off in the long run. “It actually makes that traditional underwriting and claims process more robust because you’re able to filter out those risks that are functioning and priced correctly and focus more time on where your risk is really valuable,” he assured. “So, you’re not losing any of the traditional core values your company may have. You’re actually enhancing them.”

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Stephanie Vasey

Product Manager of Commercial Lines and Inland Marine (AAIS)

stephaniev@aaisonline.com

John Dunn

Vice President (OneShield)

jdunn@oneshield.com

Jeff Heine

Chief Revenue Officer (Betterview)

jheine@betterview.com

Skip Coan

Vice President (e2Value, Inc.)

scoan@e2value.com

The post Webinar: Property Preparedness & Bracing for the Future of Commercial Insurance first appeared on AAIS.