AI is transforming storm risk assessment for the property and casualty insurance sector, according to a report by ZestyAI.

One in four insurers now use the technology for convective storms, the data showed, with 18% using AI for wildfires.

“With the growing threat of extreme weather events, we are seeing accelerated rates of adoption of AI-driven models within the insurance industry to assess risk,” said Attila Toth, ZestyAI.

“AI has an incredible capacity to transform the insurance industry by enhancing the capability of carriers to protect the assets and wellbeing of policyholders in an increasingly complex world,” he added. “This enthusiasm is reflected in our research—the consensus among insurance leaders is that AI will be a crucial enabler for realizing profitable growth going forward.”

Key insights from the study include:

• Eighty percent of carriers say AI and machine learning are enabling new avenues for profitable growth from insurers.
• Seventy-three percent of carriers say AI models help to better manage climate-related losses.
• Seventy-three percent of carriers who adopt AI models will come out ahead of those who do not.
• Ninety percent of carriers say predictive models should be transparent.
• Ninety percent of carriers say transparency aids insurers in effectively communicating with policyholders about potential risk mitigation strategies.
• Seventy-nine percent of carriers advocate for regulatory mandates requiring transparency in models.

According to ZestyAI, 81% of carriers believe they are ahead of their competitors when adapting to the challenges of climate change, while the figure drops to 66% for respondents who still favor traditional models.

Meanwhile, natural catastrophes in the U.S. totaled roughly $80 billion and accounted for nearly 80% of global insured losses during the third quarter of 2024. Economic losses in the U.S. reached at least $120 billion over the period and were above the $92 billion average since 2000.

See also:

• Oklahoma City tornadoes are a reminder to examine storm myths
• Wildfire risk leads California city to reject new apartment project
• Large hurricane losses should help stabilize reinsurance pricing