Reports & Research

Annual Wildfire Season Overview provides insights to assist insurers in effectively managing wildfire risk.

ZestyAI has released its annual Wildfire Season Overview for 2024. This year’s guide provides critical insights carriers need to stay ahead of the rapidly evolving wildfire landscape. Offering more than just data, this year’s guide is designed to help insurers make informed risk decisions in some of the country’s most volatile states. 

Download ZestyAI's 2024 Wildfire Season Overview 

This year’s guide includes: 

• Countrywide Wildfire Impact Analysis: Understand how wildfires are affecting regions beyond traditional hotspots like CA, including significant events in TX & NM.
• Future Wildfire Trends: Explore predictions for the 2024 wildfire season and understand the long-term implications of current conditions on wildfire risks.
• Regulatory Insights: Stay updated on the latest regulations affecting wildfire risk assessment insurance practices.
• AI-driven Risk Models: Learn how ZestyAI's Z-FIRE model accurately predicts wildfire risks and assists insurers in making informed decisions.
• Property-Level Risk Assessments: Discover the importance of granular, property-specific risk evaluations to improve underwriting accuracy and transparency for consumers.

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Costing insurers approximately $19 billion every year, roof claims stand as the primary driver of property insurance losses.

Traditional methods of obtaining roof age information are deeply flawed. Most carriers depend on policyholder or agent-reported data, which is often inaccurate, leading to blind spots in assessing property risk. In a recent ZestyAI survey, 63 percent of homeowners reported not knowing the age of their roof if they were not in their homes the last time it was replaced.

Join our expert panel for a deep dive into leveraging roof age analytics for a cutting-edge underwriting process and gain insider knowledge on:

• The Leading Cause of Claims: unveil the hidden truths behind roof-related claims and the costly consequences of outdated assessment methods.
• A New Era of Data: Learn about ZestyAI’s pioneering approach to roof age analytics, incorporating building permits, historical imagery, and AI for a comprehensive view
• Precision at Scale: See how to apply precise, AI-driven roof age data across your entire portfolio for consistent and reliable underwriting and claims decisions
• Technical Decision Making: Empower your actuaries and underwriters with the insights needed to enhance risk selection and optimize pricing strategies
• Efficiency in Operations: Streamline inspections and operations, focusing resources where they’re needed most, improving time-to-quote, and enriching the customer experience
• Best Practices: Learn how leading carriers are using roof age, roof condition, and peril-specific models to improve risk selection and lower combined ratios 

This transformative session is available on demand. Learn how to enhance accuracy, efficiency, and profitability in property insurance.

Save Your Spot

In an ever-evolving regulatory environment, staying informed and adaptable is crucial. Our latest interactive guide, "When Innovation and Regulation Meet", offers a comprehensive toolkit for navigating the complexities of insurance compliance and the integration of AI technologies. 

What's Inside?

• Regulatory Landscape Map: Delve into a detailed state-by-state analysis, uncovering the intricacies of filing laws and approval speeds.
• Staying Ahead of Regulation Changes: Learn how to stay prepared and ensure your compliance strategies are future-proof, aligning with the latest regulatory expectations.
• Essential AI Partner Checklist: Choosing the right AI partner is crucial for success. Our guide offers a meticulous checklist for selecting a partner that is not only compliant but also transparent and supportive, ensuring you make an informed decision.
• Emerging Regulatory Concerns: What do you need to know about privacy, bias, and AI oversight?
• Real-World Applications: Discover how ZestyAI's collaborative approach with regulatory entities has led to successful model approvals across the United States. 

Why This Guide?

As the regulatory framework becomes increasingly complex, having a reliable and insightful resource is indispensable. Our guide is tailored for insurance professionals seeking to enhance their regulatory strategy, embrace AI innovation responsibly, and achieve a competitive edge in the market.

Ready to get up to speed on 2024's regulatory environment? Access the guide.

The landscape of hail risk management is undergoing a significant transformation. Our latest publication, "Hail Risk 2024: An Interactive Guide for Insurers," offers a critical examination, illustrated with compelling data, of the factors contributing to the alarming rise in hail-related losses over the last decade. Major changes to how hail is understood have changed how insurers should view the peril. This guide isn't just about understanding hail risk; it's about redefining how it is managed in the insurance industry.

Why This Guide is Indispensable:

• Losses Rising — Understand the key factors driving record-breaking hail losses, and why there's more to the story than just "climate change."
• Reinsurance  — Learn why insurance carriers now shoulder more of the burden due to changing risk transfer relations.
• The Right Tools  — Explore how AI-based climate risk models are supplementing stochastic and actuarial models for a full picture of climate risk.
• Actionable Steps  — See how leading carriers are applying granular, property-level insights and learn the proactive steps they're taking to mitigate risks and losses.

Ready to get up to speed on hail risk in 2024? Access the guide.

The insurance industry has been grappling for years with the skyrocketing losses caused by wildfires. As ZestyAI unveils its annual Wildfire Season Overview, we can see that insurers are in a pivotal position to navigate the ongoing threat.

Wildfire Risk Isn’t Going Anywhere

While we are currently experiencing a brief reprieve from the wildfire devastation of the last few years, the ongoing threat of wildfire remains at an all-time high.

Extreme snow and rainfall across the West in 2023 have led to wetter-than-normal conditions that have acutely reduced the risk of wildfire. However, wetter conditions lead to vegetation growth, so despite 2023 presenting lower wildfire risk, the resulting vegetation accumulation, combined with persistent drought conditions in future years, will likely result in extremely high losses in the coming years. In fact, heavy rainfall has preceded many of the most severe wildfire years ever recorded in California.

Heavy rainfall has preceded many of the most severe wildfire years ever recorded in California.

Preparing for Future Wildfire Seasons

With high wildfire activity on the horizon, what steps can insurance companies take now to prepare for future wildfire seasons?

Here are three essential strategies:

1. Leverage Data for Better Understanding

Research by ZestyAI reveals that wildfires ravage 87% more land during drought years compared to non-drought years. With the western US still experiencing a megadrought that is the worst in over a millennium, it’s critical to understand the data and risks involved.

Not all homes face high risk. For the remainder, detailed property risk insights can highlight areas requiring risk mitigation. Integrate property-specific wildfire risk data into the underwriting and renewal process. This year is also an excellent opportunity to review a complete portfolio using an AI-powered wildfire risk assessment tool like Z-FIRE.

2. Educate and Empower Property Owners Through Transparency

Technology, particularly satellite/aerial imagery and artificial intelligence, can shed light on wildfire risks. Insurers can use this technology to assess the risk reduction measures that policyholders have implemented and understand how a property might withstand a wildfire.

This information is invaluable for educating homeowners and insurance agents. By knowing the specific actions that can be taken to reduce risk, such as clearing brush or using fire-resistant materials, both insurers and homeowners can be better prepared for wildfires.

3. Choose a Technology Partner Wisely

ZestyAI's Z-FIRE has set a benchmark by integrating loss data from over 1,500 wildfires and employing cutting-edge technology to derive insights on each property. By combining aerial and satellite imagery with machine learning and cloud computing, ZestyAI created Z-FIRE, a highly detailed wildfire risk assessment model.

Z-FIRE has been adopted by leading insurance carriers in every single western US state.

In 2022, Z-FIRE demonstrated remarkable performance. Its integration of data through machine learning and computer vision models has established Z-FIRE as a potent tool in wildfire risk assessment for both underwriting and rating.

Make Informed Decisions with Z-FIRE

Using Z-FIRE, insurance carriers, MGAs, and reinsurers can get access to actionable insights developed from detailed property-level risk factors. While wildfire losses may be inevitable, understanding in detail how individual properties contribute to average and tail risks is a large step forward.

The specific time and location of a wildfire is nearly impossible to predict. However, Z-FIRE can give carriers an assessment of the preconditions for that fire, and describe in detail the factors which contribute to it. Knowing, not guessing, which properties fall into a high-risk category is more important now than ever. We look forward to helping our customers through this fire season and many to come.

Z-FIRE Stands Alone in Compliance

Z-FIRE has been developed in partnership with top carriers and has been included in successful filings in California and many other western states. As regulators continue to push for additional transparency and accuracy in how insurers treat wildfire risk, AI-powered solutions provide a clear advantage because of their interpretability and sensitivity to changing conditions.

In 2023, California began requiring insurers to provide discounts based on mitigation measures, and in 2024 Oregon is poised to establish similar requirements on communications to homeowners. All of these changes create a burden on insurers, but those who can adapt to the new regulatory environment by leveraging knowledgeable partners like ZestyAI will have an advantage over competitors. AI is part of the solution, helping address climate risk and maintaining the insurability of properties across the US.

Download ZestyAI's 2023 Wildfire Season Overview 

ZestyAI has released its annual Wildfire Season Overview for 2023. This comprehensive report combines insights from recent wildfire events, prevailing drought conditions, and cutting-edge advancements in artificial intelligence to assist insurers in effectively managing wildfire risk.

Download ZestyAI's 2023 Wildfire Season Overview

Here are some key findings from the report:

A Chance To Prepare While Wildfire Fuels Accumulate

Despite a brief respite from recent wildfire devastation, the current threat remains high. Over the past decade, wildfire risk has notably increased, particularly in California. However, the occurrence of extreme snow and rainfall in the West during 2023 has temporarily reduced the risk due to wetter conditions.

It's important to note that vegetation accumulation and ongoing droughts will likely lead to substantial losses in the coming years. California remains highly susceptible to losses and significant vegetation growth. This temporary relief in 2023 creates an ideal opportunity for insurers to review the risk technologies they have in place and embrace innovative solutions to prevent future losses.

No Role for Drought in Underwriting

Drought is indicative of fire intensity, but not losses. Although drought is an important factor in seasonal wildfire risk, the presence of drought shouldn't drive underwriting. Instead, insurers should look at property-specific solutions that consider wildfire risk over the lifetime of a policy.

Research has shown that this year's heavy rainfall may be a leading indicator for severe wildfire years to come. A comprehensive understanding of buildings, vegetation, and mitigation methods at the property level is necessary to effectively manage future wildfire risk.

A comprehensive understanding of buildings, vegetation, and mitigation methods at the property level is necessary to effectively manage future wildfire risk.

Using Advanced Models to Adapt to Changing Risks & Regulations

AI-powered risk models play a key role in mitigation. Insurers who write business in wildfire states have found increasing value in AI-powered wildfire risk models as they offer actionable risk insights, adapt quickly to changing climate risks, and comply with all regulations.

Over the last year, several western states have begun to implement new regulations for insurers in response to the changing risk environment. Discounts and transparency for mitigation efforts and property-specific decisions may become an industry standard as they have in California and Oregon.

What This Means for Insurers

In evaluating wildfire risk, many analyses tend to focus on the number of fires and the size of the area they burn. However, what really matters to insurance companies and property owners is the loss of structures and what can be done to mitigate those losses.

For example, those providing insurance in California might be surprised to learn that despite smaller losses in 2022 compared to 2021, the total national count of acres burned and fires ignited in 2022 actually exceeded that of 2021. This mismatch between yearly wildfire activity and the number of structures lost suggests that wildfire losses are not simply dictated by wildfire activity.

The most significant factor is not how many fires start, or how far they spread, but the potential resilience of every structure and what the communities and homeowners have done to prepare for wildfire exposure. Research from ZestyAI and IBHS shows that for a more precise understanding of potential losses, insurers need to zoom in on individual properties. They should consider a structure’s location, building materials, surrounding vegetation, and efforts taken by the surrounding community to prepare for wildfires.

Modern wildfire risk tools like ZestyAI's Z-FIRE do just that. They analyze individual property features and measure the impact of those features on the probability of loss. They also factor in nearby vegetation, community preparations, local infrastructure, and the lay of the land. This property-centric approach doesn’t try to predict exactly what a wildfire will do. Instead, it gives valuable information on how and why properties might be damaged by wildfires.

These models don't just offer a simple risk score, but also help explain what makes a particular property vulnerable and what steps can be taken to protect it.

 
Find out more, including how Z-FIRE performed in 2022, in this year’s Wildfire Season Overview.

Download ZestyAI's 2023 Wildfire Season Overview