ZestyAI Announces Risk Analytics Solution for Severe Convective Storms

Z-HAIL and Z-WIND combine to provide a comprehensive solution for severe convective storms, which the vendor identifies as the fastest growing and most costly secondary peril insurers face.

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ZestyAI (San Francisco), a provider of climate and property risk analytics solutions powered by artificial intelligence (AI), has announced that severe convective storms have joined the growing list of perils addressed by the company’s risk analytics platform. ZestyAI says that its new Z-WIND and next-generation Z-HAIL models combine to provide a comprehensive solution for severe convective storms, which the vendor identifies as the fastest growing and most costly secondary peril insurers face with nearly $22 billion in damage reported in 2022 alone.

“Insurers continue to grapple with skyrocketing losses brought on by traditional stochastic models that provide inadequate risk assessment for severe convective storms,” comments Kumar Dhuvur, Co-Founder and Chief Product Officer, ZestyAI. “That leaves carriers struggling to explain claims when they occur, often falling back to methodology that focuses exclusively on individual large storms. Using a single event to explain losses is like blaming a single candy bar when a tooth develops a cavity.”

Kumar Dhuvur, Head of Product, ZestyAI.

ZestyAI describes its Z-HAIL and Z-WIND models as rooted in scientific research, including a study  just released by the vendor and the Insurance Institute for Business & Home Safety (IBHS), which shows claim frequency is affected by property-level characteristics, accumulated roof damage from previous storms, and potential exposure to future hail events. “Traditional stochastic models don’t account for the relationship between weather and the structure itself, and they also have many shortcomings with respect to data sources—records don’t provide full geographic coverage and only consider storms reported to have hailstones over one inch. These omissions in both property-specific and climate data result in predictions that are wildly off actuals,” a ZestyAI statement says.

ZestyAI asserts that its models are unique in that they intersect decades of historical climatology data with property-specific features for unparalleled accuracy in risk assessment. To do this, ZestyAI says it taps into the immense computing power of the cloud and leverages the latest techniques of AI and machine learning. Using its proprietary Digital Roof technology, ZestyAI says it is able to precisely model the vulnerability of every property in North America to hail and wind based on their specific characteristics, such as roof complexity, quality, and building materials, among others.

These vast amounts of data are then synthesized into two scores, Claim Frequency and Claim Severity, so insurers have an accurate assessment of the expected claim frequency for each property as well as an accurate understanding of how serious a future claim may be, the ZestyAI statement explains.

Zesty AI calls Z-HAIL and Z-WIND the first AI models to give carriers hail and wind risk assessment that can be used in both underwriting and rating at the time of quote. Using insights into a roof’s susceptibility to severe convective storms and the potential severity of those claims, insurers can accurately segment properties by risk level, according to the vendor.

Building on the Success of Z-Fire

ZestyAI characterizes the new models as build on the success of the company’s wildfire assessment product, Z-FIRE, which it says has been a key piece in addressing wildfire risk in Western states of the U.S. With these additional climate risk products, ZestyAI notes that it now addresses at least one peril for every home and business in North America.

ZestyAI and IBHS Collaborate to Make Hail Losses More Predictable

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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