Some California Homeowners May Regain Coverage After Wildfires

Thousands of California residents who can only purchase homeowners policies through the state’s last resort insurance program will now be eligible for Farmers Insurance coverage.

Farmers’ ability to offer insurance is related to a partnership with startup Zesty.ai, which will enable Farmers to use artificial intelligence incorporating high-resolution aerial imagery, building materials, and code data and location details to instantly assess the risk of an individual property. losses from wildfires, said Attila Toth, founder and CEO of Zesty.ai.

Farmers expects to add about 30,000 policyholders over the next year through technology. The insurer is one of the largest insurance companies in the state, with more than 1.5 million residential policyholders in California. Many insurers have pulled out of wildfire-susceptible communities and referred homeowners to the California FAIR Plan to get their coverage.

Farmers will continue to use a long-standing model that assesses wildfire risk in the geographic area around a property, said Keith Daly, president of Farmers personal lines. By adding the technology from Zesty.ai, the insurer will be able to take a more specific approach, he said. While a particular area may have a higher fire risk, a property within that area may not have the same level of risk.

“We are trying to create a solution” for homeowners struggling to buy insurance, Daly said.

The California Department of Insurance recently examined farmers’ use of Zesty.ai technology in what officials said is the first review of its kind related to underwriting wildfires.

“As the insurance industry continues to consider race and discriminatory practices,” the state seeks to ensure that algorithms used for underwriting and rating purposes do not introduce or perpetuate bias, said Michael Soller, deputy commissioner of the California Department of Insurance .

“With Farmers promising to write at least 30,000 new policies for homeowners at increased wildlife risk using this new tool, we are pleased to see the pendulum swing in the other direction,” said Soller.

Zesty.ai, founded in 2015, is one of the companies trying to help home insurers find better ways to assess applicants’ fire risk. Some other operators in California and elsewhere are using or experimenting with artificial intelligence.

In May, Hippo Enterprises Inc., a Home insurance technology company, said it would expand its use of geospatial imaging and technology based on new information from real estate data firm CAPE Analytics to better understand risks, including wildfires. Hippo said geospatial analysis can identify property changes on an ongoing basis and allow insurers to communicate with clients early on to make recommendations on actions such as clearing surrounding brush or pruning overhanging tree limbs.

In March, Zesty.ai announced a partnership with a unit of Cincinnati Financial Corp.

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, making him one of the firm’s newest clients.

Write to Leslie Scism at [email protected]

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