Products

Solutions

Resources

Get a Demo

Driving ROI with AI-derived risk insights: A guide for P&C insurance leaders

Dec 2024
59% of US P&C insurers believe the industry will be powered by AI in the future.
Dec 2024
hero-image
The property and casualty (P&C) insurance industry is facing an oncoming storm of challenges. Next-generation risks, such as climate-induced severe weather, inaccurate property assessments, and rising fraud, are converging with the need to modernize outdated systems and manage large volumes of data. The urgency to adapt is only getting stronger, as illustrated by the devastating impacts of events like Hurricane Helene and Hurricane Milton, with combined damages exceeding $100 billion.
To help insurers navigate these challenges, the recently published report by Nearmap, The Next Gen Risk Readiness Index: P&C Insurance explores how location intelligence technology can transform underwriting and claims workflows, mitigate risks, and unlock new growth opportunities.

Why traditional methods are falling short

Traditional methods of assessing and pricing property risk no longer suffice with rising climate risk. In-person inspections, legacy systems, outdated IT infrastructure, data silos, and slow manual processes expose insurers to numerous challenges, including: 
  • Higher operational inefficiencies: When emerging risks outpace outdated processes, operational inefficiencies can dramatically increase costs and delay customer responses. 
  • Rising property losses: Severe weather events and natural catastrophes demand more accurate risk assessment tools to better predict impact, prevent losses where possible, and prepare reserves when damage occurs 
  • Escalating fraud costs: Fraudulent claims unfortunately spike following natural disasters and contribute to $45 billion in annual losses for U.S. insurers. 
Without adopting advanced tools and strategies to combat these challenges, insurers may be unable to weather a volatile market and risk falling behind.  

How AI and aerial imagery drive ROI

To create our Risk Readiness Report, we surveyed senior decision makers across U.S. P&C insurance companies. The result of this endeavor highlights how AI-derived insights from high-resolution aerial imagery can help optimize the entire insurance lifecycle. This combination of technology provides detailed property assessments—such as roof conditions or hail risk—these insights enable insurers with an accurate view of risk to act decisively and profitably.
Among those surveyed, insurers found the following key business impacts from AI-derived insights. Insurers can:
  1. Unlock new markets: 60% of insurers agree that AI insights can make previously uninsurable properties viable. Carriers can stay competitive by writing low-risk properties in high-risk markets, like wildfire-prone areas.
  2. Refine pricing models: 66% of insurers believe this advanced technology can lower average insurance costs by shifting higher premiums to high-risk properties, ensuring fairness and profitability for both the insurer and insured.
  3. Accelerate claims management: Following a severe weather event, AI-derived insights can streamline claims by performing initial damage assessments remotely. It would also reduce the need for physical inspections and enabling faster payouts for total-loss claims.
  4. Combat fraud: Historical imagery combined with AI helps identify fraudulent claims, a critical tool as fraud surges after major catastrophes. 67% of surveyed insurers reported that AI-derived insights would significantly reduce the volume of fraud.
  5. Personalized coverage: With more precise property data, insurers can create tailored policies that reflect unique risk profiles for the insured. For example, policyholders with low-risk profiles would pay lower premiums, enhancing customer satisfaction and loyalty.

What do insurers need from AI?

Despite clear benefits and ROI, only 18% of insurers surveyed have fully integrated AI-derived insights into their workflows (36% are considering adopting). This is particularly striking considering 79% are looking to buy or license a solution rather than build their own model, when considering adopting AI.
However, insurers need to see positive impact to be convinced. Proof that it can deliver on their bottom line, seamlessly integrate with other business systems, improve customer satisfaction, and enhance risk mitigation are all key factors.
How can insurers become tech-forward, but smart, in selecting and implementing AI technology?
Though not exhaustive, the following steps are critical considerations for implementing AI-derived insights effectively:
  1. Evaluate providers carefully: Choosing partners with deep insurance expertise and proven results can prevent technology misfires.
  2. Integrate seamlessly: Ensure solutions work with existing systems and meet regulatory requirements with the DOI and state regulators.
  3. Focus on transparency: Make AI models transparent and explainable to build trust internally, as well as regulators, agents, and insureds.
  4. Measure ROI: Work with provider to map out quick wins early. From there, continuously assess the financial and operational impact of new technologies for longer-term impact.
The stakes for P&C insurers are only growing. As climate risk, fraud, and operational challenges converge, embracing next-generation tools like AI-derived aerial imagery is no longer optional—it’s essential. The Risk Readiness Report by Nearmap provides the roadmap to navigate this transformation, equipping insurers with the insights needed to mitigate risk, reduce costs, and drive ROI.
Learn more about the Risk Readiness Report and how AI-derived insights by Nearmap can future-proof your business.