This article first appeared on Linkedin, written by Spotr CEO Dirk Huibers
Main points of this article:
- AI is a powerful tool that can provide insights, automate processes, and improve outcomes in various industries, including the insurance industry.
- AI-driven property intelligence involves collecting and organizing data from various sources, using AI to scan properties and generate additional data, and analyzing the resulting data to identify risks and monitor changes over time.
- Property intelligence can be used to improve underwriting, identify underinsurance, improve claim handling, and support commercial activities.
- The Paris Agreements are driving an unprecedented transformation of real estate across the world, driving an increasing need for accurate property intelligence.
If you're a big Seinfeld fan like me, you probably heard Jerry say the title of this article in your head. Jerry Seinfeld is closely associated with this sentence (even though he only actually said the phrase 4 times in 180 episodes), so when I asked ChatGPT to "Think of a title Jerry Seinfeld would have written for an article describing what property intelligence is (..)", this is what it came up with.
The rise of AI-driven solutions
The past year we saw the emergence of generative AI solutions such as ChatGPT and Dall-E, providing us with a glimpse into the potential of AI to transform the way we do business and interact with technology. In the process of writing this blog, I used the prompt "What is property intelligence?", which generated the below definition:
"Property intelligence is the collection and analysis of information about real estate properties. This can include data on property ownership, value, location, and characteristics, as well as information on local market conditions and trends. Property intelligence can be used for a variety of purposes, such as evaluating investment opportunities, identifying potential buyers or sellers, or analyzing the performance of a portfolio of properties."
This is a prime example of how far artificial intelligence has come in recent years. AI is no longer a fad or something for the future. Instead, it's a powerful tool that is available to us now and can help us change the way we work. Whether it's in the insurance industry, where property intelligence is gaining importance, or in other fields, AI can provide insights, automate processes, and improve outcomes.
The winning carriers in this future 'use new technologies to create innovative products, harness cognitive learning insights from new data sources, streamline processes and lower costs, and exceed customer expectations for individualization and dynamic adaptation', as described by McKinsey in this article.
AI, connected devices, physical robotics, and open-source protocols are already impacting underwriting, pricing, and claims handling in the insurance industry. For example, automation can significantly speed up the underwriting process, allowing insurers to make decisions in just seconds.
In recent years, techniques such as computer vision have enabled the use of artificial intelligence (AI) in the field of property intelligence as well, and this trend is expected to continue in the future.
How does AI-driven property intelligence work?
Property intelligence starts by collecting loads of data from different sources. These sources include images from satellites, streetview, drones and interior, lidar data and GIS maps. The data from these sources is stored in a digital platform and linked to the right addresses, orientation and even location from where the image was taken.
After the data has been organized, the inspection of properties can start. Using AI, all properties in a portfolio are scanned to generate additional data such as measurements of building elements, the condition of the building, and any specific risks associated with the property. One key advantage of this process is that it is completely remote and the data is traceable, in contrast to traditional surveying methods that require an on-site presence and where data is locked in non-searchable formats like PDF.
If needed, extra information about the building can be generated, like building type, size or shape, floor count or shading (from trees or other elements, to indicate fire risk); all depending on your specific business requirements.
After the buildings in a portfolio have been inspected and additional data has been generated, the data can be analyzed on a large scale. This can be used, for example, to identify specific risks or detect underinsurance. Additionally, the data is continually updated, allowing for the monitoring of changes over time.
Property intelligence in Europe
One potential concern with property intelligence is the variation in data quality around the world. While cars are relatively similar worldwide, buildings, particularly residential ones, can vary significantly from one region to another. For example, buildings in India differ greatly from those in Japan, and standard housing in the US is quite different from standard housing in Europe.
Rob Wijnhoven, Head of R&D at Spotr, shared his thoughts on this topic:
"In the US, houses often have thin plywood walls, covered with a brick print, while in Europe constructions use metal and concrete with brick and concrete walls. European houses are therefore less vulnerable to extreme weather conditions and deteriorate less quickly, resulting in a longer life time and less frequent maintenance needs. Our AI algorithms are extremely good at recognizing and understanding the construction and materials of European houses, which is required for accurate and detailed insight in housing portfolios."
Property intelligence use cases in insurance
1. Property intelligence as input for underwriting processes
First of all, property data can be valuable input for insurance companies in their underwriting processes. By using high-resolution images and aerial imagery, insurers can quickly and accurately verify the characteristics and condition of a property, including its age, potential for water and wind damage and any potential hazards that may affect its future risks. This information can help insurers to better assess the risks associated with insuring a particular property and speed up the underwriting process.
2. Property intelligence to detect underinsurance or risks
But also within existing policies, property intelligence can be used by insurers to identify underinsurance or undetected risks. It is estimated that as much as 40% of commercial properties in the UK are underinsured, often due to policyholders not updating their premiums regularly. Through a property intelligence solution, insurers can identify properties that may be underinsured and take steps to correct the issue, ensuring that policyholders are adequately covered in the event of a loss.
For instance, Spotr has collaborated with an insurance company in Sweden to identify and examine the properties in their commercial insurance portfolio. It is common for policyholders to add new buildings to their estates over time, which may not be adequately insured. Some of these buildings can even pose significant risks, such as those with overhanging trees.
3. Property intelligence to improve handling of insurance claims
In addition to supporting the underwriting process and helping to prevent claims, property intelligence can also be used to improve the handling of insurance claims. This can be achieved by providing insurers with accurate and up-to-date information about the characteristics and condition of a property, which can be used to assess the extent of damage and determine the appropriate course of action for repairs.
4. Property intelligence to support marketing and sales efforts
Next to its applications in underwriting and claim handling, property intelligence can also be used to support the marketing and sales efforts of insurance carriers. For example, if an insurer is looking to generate leads for potential solar panel customers, they will need to identify not only which roofs are suitable for the installation of solar panels, but also identify specific characteristics of leads that are more likely to convert. Property intelligence can help insurers to gather this information and use it to target their marketing and sales efforts more effectively.
Why use property intelligence as an insurance carrier?
Real estate across the world is undergoing an unprecedented transformation. In order to meet the target set by the Paris Agreement of limiting global warming to 1.5°C, greenhouse gas emissions must be reduced by 45% by 2030 and reach net zero by 2050. The real estate sector is responsible for upwards to 40% of the world’s Green House Gas emissions, making it a crucial sector to achieving the Paris Agreement targets. The 2020s are turning out to be the defining decade for climate action, forcing companies to contribute in a meaningful way.
Given the scale of these challenges, insurers are turning to technology to not only manage risk and meet regulatory requirements but also to offer consumers new products and services that help them mitigate climate risks or become more sustainable. As a result, the need for accurate property insights has never been bigger.
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