AI tool adds cat risk information to property premium calculation
While in the past a property’s value has been the main basis for the calculation of exposure risk and premium, e2Value is now adding structural characteristics to the process and producing significant changes in the assessment as a result.
e2Value offers web-based property valuation solutions through an estimator that can calculate the cost of replacing a residential, commercial or farm structure, and provide a complete valuation report.
There is a correlation between the value of the property and the premium, said Todd Rissel, chief executive officer of e2Value, at the Intelligent InsurTECH Europe 2018 conference in London today.
“However, the characteristics of the structure allow a score to be assigned on how it reacts to each of the major perils and a combination of them. The numbers change, but the property values are completely separate,” Rissel explained.
The structure score can significantly change the way the risk portfolio is perceived. “About 3 percent of written premium represents about 40 points of insurers’ loss ratio,” Rissel said. “The hard part is to find them so you can get the right price for the exposure,” he added.
As an example, Rissel pointed to two homes of the same size, one being on ground level and the other on a higher level. “Theoretically, if there is a water leak on the first floor, the water can pass through the ceiling and also affect the home below, whereas if a leak occurred in the ground floor home, the damage could be more contained,” he explained.
“Hail is likely to damage the roof of the upper level home and produce less damage to the ground floor residence,” he added.
“We provide characteristics about structures. Right now, we are running about 125 characteristics for homes; these affect the way the properties are at risk from wind and weather. e2Value characterises and runs an artificial intelligence process on the data to develop a score,” Rissel said.
As a result, an insurer can identify more accurately the exposure risk of properties to losses and better align the premium with the risk.
e2Value currently provides web-based insurance-to-value and collateral value monitoring solutions for residential, commercial and farm and ranch properties.
Through its Pronto platform, e2Value operates on a subscription-based, software-as-a-service model, catering for property insurers and banking professionals. The platform requires only the input of the property’s address to produce a report that includes a complete structure valuation with images and a data score that specifies which information the value estimates are based on.
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