Why 1 in 4 P&C Insurers Are Turning to AI to Handle Extreme Weather Risks
Hurricanes Helene and Milton in 2024 serve as stark reminders of the chaos extreme weather can unleash, pushing insurers to overhaul their risk management strategies. Helene’s landfall in North Carolina devastated 39 counties, affecting nearly half of the state’s small businesses and displacing over a million residents. Recovery efforts mobilized National Guard troops, who delivered 13,500 tons of aid and restored critical infrastructure.
Hurricane Milton carved a destructive path through Florida, inundating areas like Tampa and St. Petersburg. Flooding and power outages left homeowners and small businesses grappling with prolonged shutdowns and financial strain. Florida’s Office of Insurance Regulation reported over 400,000 claims filed in the storm’s aftermath.
The rising frequency of such disasters is driving insurers to adopt AI at an accelerated pace. A ZestyAI survey of 200 top insurance executives revealed that 25% of U.S. Property and Casualty (P&C) insurers now use AI to predict and respond to extreme weather risks. This trend is only growing, as McKinsey forecasts that by 2030, over 50% of claims activities could be automated, potentially cutting processing times by up to 70%.
How AI is Transforming Insurance Response to Climate Events
AI’s value extends beyond catastrophe response, enhancing claims management and underwriting. Here’s how leading insurers are leveraging AI to stay ahead:
- USAA deployed AI-powered claims processing and drone technology, drastically reducing payout times. Drones assessed damage in hard-to-reach areas, accelerating inspections and repairs.
- Zurich North America utilized AI-driven risk modeling to predict storm impacts pre-landfall, enabling faster deployment of response teams. Zurich’s AI tool, CATIA, analyzes claims in minutes, streamlining reinsurance recoveries. Generative AI further enhances CATIA’s ability to process unstructured claims data.
- Allstate introduced virtual AI adjusters that assess claims severity in real-time, prioritizing urgent cases and trimming operational costs.
- Farmers Insurance leveraged satellite imagery and machine learning to rapidly assess property damage post-storm, expediting settlements and refining underwriting.
- Citizens Property Insurance Corporation integrated AI with real-time weather data to refine pricing models and better anticipate climate risks.
These innovations demonstrate AI’s ability to shift insurance from reactive to proactive, minimizing losses and optimizing recovery. With 45% of industry leaders prioritizing peer adoption of AI models over price (37%) and regulatory approval (31%), the industry is rapidly moving toward smarter, more resilient risk management.
Source: https://www.simplesolve.com/blog/insurers-are-using-ai-to-tackle-extreme-weather-risks-in-america
