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San Francisco, CA — November 13, 2024 — ZestyAI, the leading provider of AI-driven property and climate risk analytics for the insurance industry, has partnered with Standard Casualty Company, a specialized property insurer serving manufactured home owners.

Through the partnership, Standard Casualty will leverage ZestyAI’s platform to elevate risk assessment and policyholder collaboration. This will enable Standard Casualty to gain faster and more accurate insights into property risks which have become more complex due to the increase in extreme weather events driven by climate change. As a result, Standard Casualty will be in a stronger position to maintain comprehensive coverage, particularly in high-risk states such as Texas, Georgia, Arizona, and New Mexico.

This will enable Standard Casualty to gain faster and more accurate insights into property risks which have become more complex due to the increase in extreme weather events.

Mobile homes are vulnerable to accidents and natural disasters, such as fires, floods, and storms. In some cases, due to their design and construction, mobile homes might be more susceptible to certain types of damage. With this partnership, Standard Casualty prioritized finding a solution that enables collaboration with policyholders to actively reduce these risks, allowing them to maintain coverage even in high-risk areas. Through ZestyAI’s advanced analytics, Standard Casualty can now better support policyholders by identifying and addressing specific vulnerabilities before disaster strikes.

Standard Casualty will integrate ZestyAI’s Z-PROPERTY, Z-FIRE, and Z-HAIL solutions, positioning itself as a leader in mobile home insurance by proactively mitigating property risks related to wildfires and severe weather events:

• Z-PROPERTY delivers property-specific risk insights by analyzing building characteristics and environmental factors, empowering underwriters to make precise, informed decisions for each property.
• Z-FIRE evaluates both wildfire hazard and vulnerability at the property level by analyzing unique structural characteristics and how they interact with local climate. With Z-FIRE, insurers like Standard Casualty can directly engage policyholders in tailored risk mitigation strategies.
• Z-HAIL predicts hail claim frequency and severity for every property in the U.S., assessing the interaction of climatology, geography, and each structure's unique features in 3D. This model builds on decades of scientific research and collaboration with leading researchers, including the Insurance Institute for Business & Home Safety (IBHS).

Rick Smith, Underwriting Manager at Standard Casualty, noted the alignment of ZestyAI’s solutions with the company’s strategic goals: “We chose ZestyAI because their team knows the industry inside out, and no one else provides the regulatory support that they do. The platform’s transparency and functionality allow us to actively partner with our policyholders on reducing risk rather than simply denying coverage. ZestyAI’s tools and intuitive interface make all the difference in efficient, effective underwriting for our market.”

"We chose ZestyAI because their team knows the industry inside out, and no one else provides the regulatory support that they do."

Attila Toth, CEO and Co-Founder of ZestyAI, said: “Standard Casualty’s commitment to reducing policyholder risk aligns seamlessly with our mission at ZestyAI. Our solutions empower insurers like Standard Casualty to guide homeowners by mitigating risks, offering actionable insights into wildfire and hail exposure. This partnership sets a new standard for how insurers and homeowners can work together to tackle risk head-on.

“With ZestyAI’s support, Standard Casualty is poised to strengthen its presence in the -manufactured home insurance market, expanding its reach as a trusted expert in property risk assessment.”

ZestyAI, the leading provider of climate and property risk analytics solutions powered by Artificial Intelligence (AI), announced today its partnership with Donegal Insurance Group® on a project that utilizes its new Roof Age solution for Donegal’s existing Personal Lines book of business.

Through the project, Donegal, a Pennsylvania-based regional insurance carrier, leveraged ZestyAI’s Roof Age solution to populate Homeowner policy renewals where roof age was absent.

ZestyAI’s Roof Age solution pinpoints the age of a roof using data from both building permits and historical imagery going back 20-plus years. This unique approach allows the company to determine the validated age of each roof with over 90 percent accuracy and nearly 100 percent coverage across the contiguous US.

“Accurate roof age information is critical for properly assessing and pricing risk,” said Hank Narvaez, Vice President of Personal Lines Product Development at Donegal. “ZestyAI’s Roof Age solution was a clear choice for us due to its solid coverage length of historical imagery. By leveraging both building permit data and aerial imagery, we gain added confidence in our underwriting and rating decisions.”

“ZestyAI’s Roof Age solution was a clear choice for us due to its solid coverage length of historical imagery. By leveraging both building permit data and aerial imagery, we gain added confidence in our underwriting and rating decisions.”

“Blind spots in assessing property risk can be very costly for insurers,” said Attila Toth, Founder and CEO of ZestyAI. “Roof claims stand as the primary driver of insurance losses, yet many carriers continue to rely on unvalidated roof age information. We are excited to partner with Donegal to enhance their risk assessment with the most accurate roof age solution on the market.”

Roof Age is one part of a complete range of ZestyAI products designed to evaluate roof-related risk. Other solutions include Digital Roof, which creates a digital twin of every structure in the US for unparalleled insights on condition, complexity, and potential points of failure, as well as peril-specific risk models such as Z-HAIL, Z-WIND, and Z-STORM.

Climate Intelligence: How AI Shifts Risk and Redefines the Insurance Landscape

In today’s competitive insurance market, carriers equipped with AI-powered property insights gain a significant edge, enabling them to assess and manage risk with unprecedented accuracy.

By leveraging advanced technologies like artificial intelligence and computer vision, insurers can now analyze property-specific risks with a level of detail that was previously unattainable.

Z-FIRE: Leading the Way in Wildfire Risk Assessment

For example, Z-FIRE, ZestyAI’s leading AI-powered wildfire risk solution, has been widely adopted by carriers across the western U.S., providing them with critical insights to underwrite new business in wildfire-prone areas.

This information advantage drives a phenomenon known as adverse selection, where disparities in risk assessment capabilities lead to an uneven distribution of risk across the market. Insurers without access to advanced tools like Z-FIRE are at a distinct disadvantage, as they continue to underwrite policies based on outdated methods.

Insurers without access to advanced tools like Z-FIRE are at a distinct disadvantage, as they continue to underwrite policies based on outdated methods.

Over time, this imbalance results in a higher concentration of risk among carriers relying on traditional approaches, leading to significant discrepancies in loss ratios between competitors.

Transforming Underwriting Practices

Property-Specific Risk Analytics

Z-FIRE exemplifies how property-specific risk analytics can transform underwriting practices, particularly in high-risk areas. By providing detailed insights into the frequency and severity of potential wildfire losses, Z-FIRE allows carriers to identify and avoid high-risk policies more effectively.

However, even after these properties are identified and potentially avoided by Z-FIRE users, they remain in the market. This leaves insurers without such insights increasingly vulnerable to the costly effects of adverse selection.

Z-FIRE and Regulatory Milestones

Adapting to Regulatory Requirements

Z-FIRE was the first AI model for wildfire risk assessment to obtain approval as part of a carrier rate filing from the California Department of Insurance (CDI). This milestone highlights ZestyAI’s leadership in adapting to the evolving regulatory landscape, where transparency and risk mitigation are becoming increasingly critical.

New regulations in states like California and Oregon now require insurers to incentivize homeowners’ risk reduction efforts and provide clear, detailed information about rate adjustments and policy decisions. This push for greater transparency aligns with the capabilities of advanced tools like Z-FIRE, which offer insurers the detailed, property-specific data needed to comply with these regulations and ensure fair treatment of policyholders.

Adverse Selection in a Changing Market

Risk Concentration and Legacy Approaches

As ZestyAI’s insurance partners continue to vet properties using state-of-the-art risk models, the proportion of very high-risk policies in the remaining market continues to grow.

This shift underscores the unsustainability of legacy approaches to wildfire risk, as the environment changes and competitors armed with superior insights make new policies even riskier for those lagging behind. Insurers relying on outdated risk models may not realize how the market has shifted until the claims process reveals significant and unforeseen losses.

Insurers relying on outdated risk models may not realize how the market has shifted until the claims process reveals significant and unforeseen losses.

Z-FIRE's Growing Value in the Insurance Industry

With a growing percentage of insurers adopting Z-FIRE, its value as a tool for underwriting new business becomes more evident than ever. While the threat of adverse selection looms large for carriers not using AI-powered insights, those with access to these advanced tools are better positioned to navigate the evolving landscape.

Preparing for Future Challenges

As wildfire seasons become increasingly severe and the regulatory environment continues to tighten, the ability to accurately assess and transparently communicate risk is crucial to the stability of the insurance market.

The ability to accurately assess and transparently communicate risk is crucial to the stability of the insurance market.

Ultimately, insurers who embrace AI-powered property insights gain a competitive edge, allowing them to minimize losses, stay ahead of regulatory demands, and outpace competitors still relying on traditional methods. In a market where information is power, ZestyAI’s platform provides the advantage needed to thrive.

Adverse Selection's Implications for Pricing

The Role of Property Mitigation in Risk Assessment

Adverse selection has significant implications for pricing. Consider the Park Fire perimeter, an area with a markedly elevated wildfire risk. Property mitigation plays a crucial role in risk assessment. The majority of properties in this area carry a high level of risk; 54% are categorized as “very high” risk according to the Z-FIRE L2 score.

Identifying Lower-Risk Properties

However, there are still opportunities to identify lower-risk properties, even within wildfire-prone regions. In fact, low and moderate-risk properties account for 17% of those within the Park Fire perimeter, presenting valuable opportunities for insurers to differentiate pricing and capture lower-risk business even in high-risk areas.

How Does Adverse Selection Impact Pricing?

Territory-Based Pricing vs. Property-Specific Scores

So how does this impact pricing? Let’s break it down with an example. Assuming a carrier’s statewide average wildfire premium is $280, we can assume the average wildfire premium is $843 for this area based on ZestyAI’s Z-FIRE model output. Applying territory-based pricing would mean that every home pays roughly the same wildfire premium per dollar of coverage.

The Benefit of Z-FIRE’s Tailored Approach

However, by leveraging Z-FIRE’s property-specific scores, insurers can adopt a more tailored approach that accurately reflects each property’s unique risk profile.

By leveraging Z-FIRE’s property-specific scores, insurers can adopt a more tailored approach that accurately reflects each property’s unique risk profile.

For example, a low-risk property would be charged a wildfire premium of $513, while a very high-risk property could be assigned a load of $986. This strategy not only helps attract lower-risk customers through preferred pricing, but also ensures that higher-risk properties are adequately rated.

Outpacing Competitors Through Risk-Based Pricing

In contrast, carriers whose pricing strategies are based on the average premium will be most competitive for high-risk properties but will struggle to attract lower-risk ones. Z-FIRE allows carriers to outpace risk and competitors alike.

Want industry-leading wildfire risk insights?

See Z-FIRE in Action

Regulatory Ready: How to Use AI Responsibly in Insurance Under the NAIC Bulletin

AI innovation is revolutionizing the insurance industry, but with these advancements come new regulatory challenges. To ensure responsible use of AI in insurance, it’s essential to stay informed about the latest regulatory frameworks.

Join us on November 13 at 11 PT / 2 ET for an exclusive webinar where we’ll break down how to navigate AI regulations under the NAIC Model Bulletin.

In this session, led by

• Kevin Gaffney, Vermont’s Commissioner of Financial Regulation and Chair of the NAIC’s Innovation & Tech Committee
• Bryan Rehor, Director of Regulatory Strategy at ZestyAI

you'll gain critical insights on how to align AI usage with evolving regulatory expectations.

 
What You’ll Learn

This webinar will provide practical takeaways that can help insurance professionals understand and comply with the latest AI standards:

• NAIC Model Bulletin Overview: Understand the core principles behind the NAIC’s AI regulation framework.
• Ensuring AI Compliance: Learn how to ensure responsible AI usage according to NAIC standards.
• Preparing for Regulatory Oversight: Get ready for closer state-level inspections and regulatory scrutiny.
• Vendor & Partner Compliance: Ensure that your partners meet regulatory requirements for transparency and fairness.
• Interactive Q&A: Take advantage of the opportunity to ask our experts about the complex world of AI and insurance compliance.

Meet the Experts

Kevin Gaffney
Vermont Commissioner of Financial Regulation

As an expert in AI regulations and the NAIC’s Model Bulletin, Commissioner Gaffney will provide key insights into how insurance companies can effectively implement responsible AI practices. His experience in overseeing state-level financial regulation will offer attendees a unique perspective on aligning AI innovation with compliance.

Bryan Rehor
Director of Regulatory Strategy at ZestyAI

Bryan Rehor will offer practical advice on maintaining AI compliance while harnessing the full potential of AI innovation. His expertise lies in guiding insurers through regulatory demands, ensuring that AI practices meet industry standards while avoiding common pitfalls.

Why You Should Attend

This webinar is tailored for professionals in insurance, particularly those in Executive, Legal, Compliance, Product Management, Underwriting, Actuarial, Risk, and Innovation roles.

Whether you’re navigating the complexities of AI regulation or preparing for the next steps in compliance, this session will provide actionable insights to help you move forward confidently.

Bonus Content

By registering for the webinar, you’ll receive our interactive guide:

“When Innovation & Regulation Meet: What Insurers Need to Know About AI and Regulatory Compliance.”

This resource will deepen your understanding of how to stay compliant while leveraging the power of AI in your insurance operations.

 
Don’t miss out!
Register for the webinar and ensure your spot in this exclusive event.