Can AI Home Health Assessments Boost Reinsurance Capacity?

Jun 12, 2024 / by Micah Kalisch

Due to today’s hard market, reinsurers are much more selective about the risks they underwrite. To secure reinsurance coverage, personal lines property carriers must maintain a healthy book of business and loss ratio.

One challenge to maintaining a healthy book of business for carriers is that their margins are too thin to inspect every property. This is why property insurers use a variety of data sources to understand the risks both inside and outside the home, such as:

  • predictive analytics for non-catastrophe (non-CAT) water and fire risk;
  • roof scores to assess roof condition;
  • building characteristics and permit data; and
  • traditional loss control inspections.

While these data sources are a great start, they fall short because they don’t identify specific failure points inside a home or determine a home's overall condition.

Small Issues Lead to Big Claims

Chrp Technology’s analysis of claims data has shown that small issues can lead to big losses. For example, did you know one of the biggest drivers of non-CAT water losses in homes (both old and new) is related to a plastic coupler nut located under a toilet’s tank? Even though the nut says, “install by hand,” these nuts are often tightened using a wrench or pliers. This improper installation causes ripples or cracks in the nuts, accelerating their deterioration and leading to claims. Recently, a carrier we spoke with suffered a $1.5 million claim from a $2.50 nut. Advances in AI can now estimate the lifespan of components inside and outside homes which may lead to non-CAT water and fire claims.

As personal lines property insurers grapple with securing reinsurance capacity, some carriers are using AI-based home health assessments to flip the script on traditional underwriting methods by proactively fixing issues and writing more low-risk policies focused on a home’s condition, rather than an arbitrary threshold (e.g., age of home).

By taking a more modern approach to underwriting through the use of AI-based home health assessments, carriers have been able to secure excess reinsurance capacity by fixing issues inside and outside of homes, capturing vital data points about properties, and making better underwriting decisions based on the home’s condition.

In the sections below, we’d like to show you how the next generation of AI and digital technologies is helping carriers in three key areas to maintain a healthy book of business and reduce their loss ratios.  

Risk Selection: A Picture is Worth a Thousand Words

Adverse risk selection plays a vital role in minimizing losses. However, insurers cannot do much regarding catastrophic claims. All they can do is perform their due diligence and spread their risk to minimize losses.

Non-CAT water and fire claims are a different story. Now, more than ever, underwriting is under pressure to avoid as many of these claims as possible, and with good reason. Our analysis has shown that eight out of the top 15 issues leading to claims are related to basic plumbing issues.

AI and digital technologies make it possible to identify non-CAT water and fire issues from cell phone imagery. By simply texting a link to a homeowner, carriers can walk a consumer through a guided self-inspection of their home. After capturing the imagery, AI can analyze the photographs pixel by pixel to assess the condition of 250 subcomponents inside and outside of a home.

Every carrier has hundredsor even thousandsof minor issues (which are easy to fix) in their book of business. AI can alert underwriters about these issues to help carriers:

  • reduce losses by identifying symptoms that lead to claims; and
  • increase policyholder retention by creating programs that help customers maintain healthy homes.

By proactively identifying and resolving maintenance issues early in the underwriting process, our carrier partners have reported a 5 to 10% decrease in annual loss ratios and up to a 12% increase in renewals.

Underwriting Efficiency: Finding Needles in a Haystack

Traditional loss control inspections can be very helpful in mitigating risk, but they are geared towards the home-buying experience rather than insurance underwriting. Reviewing an inspection to identify hazards that could lead to a claim is like finding a needle in a haystack. It can take an underwriter 20 to 30 minutes to review a single report, which is neither scalable nor cost-effective.

AI has evolved over the last few years from identifying objects (e.g., type of water heater or appliance) to assessing the condition of homes and identifying potential issues.

By highlighting the issues found and putting them on top of home health assessment reports, underwriters no longer need to dig through reports to take action. This can reduce the time it takes to review an individual report from 20 to 30 minutes to under 1 minute. In addition, carriers can create unique underwriting guidelines and workflows based on the health of a home (unhealthy vs. healthy).

For example, healthy homes with no issues can be automatically moved down the underwriting chain.

For new business submissions or renewals with minor issues, underwriters can let consumers know that they noticed a few small problems, but if the consumer can fix them, they’d be willing to work with them.

Finally, for policies with major hazards, carriers can automatically send reports to agents and homeowners to let them know they don’t provide coverage for renovations, or their roofs need to be fully replaced. 

Claims Prevention: Little Things Can Make a Big Difference

An ounce of prevention is worth a pound of cure. While some claims are inevitable, many others are preventable.

It’s been estimated that in 2024, one in 60 homes will file a water damage claim.1 Our analysis of claims data has shown that little things can lead to big claims. For example, did you know the second leading cause of water claims is related to water supply lines?

Around 30 years ago, manufacturers of stainless-steel supply lines started using surgical rubber tubing wrapped in stainless steel braids to improve supply lines' aesthetics and to reduce costs. Unfortunately, manufacturers didn’t consider the reaction between chromium in the steel braids and the chlorides found in most household cleaning products. These chlorides can strip away steel's protective properties, leaving behind iron strands that are susceptible to rusting and fracturing over time. Once braids begin to weaken, it’s only a matter of time before the malleable rubber pushes through an opening in the braiding and bursts like a balloon, leading to a water claim.

Home electrical fires are another example of minor issues turning into big claims. Electrical fires cause an estimated $1.3 billion in property damage each year.2

One of the benefits of AI-based home health inspections is that they can identify issues related to water and fire claims, such as:

  • rusting and pitting on supply lines;
  • exposed wires under sinks; and
  • recalled electrical panels and breakers.

If a traditional home inspection catches any of these issues, it can take 20 to 30 days for it to reach an underwriter. The turnaround time with AI-based home health assessments is much faster at five to seven days, allowing underwriters to work with insureds and agents to fix any issues, avoid unnecessary claims, and create healthier homes.

Gaining Reinsurance Confidence with AI
Loss control in commercial lines property is a mature capability. Some would even

argue that loss control engineers at companies like FM Global know more about the facilities they insure than the employees who work in them.

Unfortunately, due to razor-thin margins in personal lines property, carriers had to be selective about the properties they inspected and how they inspected them. AI and digital technologies can now help carriers gain vital information about the inside and outside of homes in a scalable and cost-effective way.

The advancement of AI and digital technologies couldn’t have happened at a better time as one of the first questions reinsurers and brokers ask carriers is, “What is your loss ratio and how healthy is your book of business?” By capturing vital data about policies and fixing potential issues, carriers can provide insights about the number of homes with roofs under ten years old and other valuable data points to gain reinsurer confidence.

Going forward, we believe carriers who leverage AI-powered home health assessments will have a much easier time securing reinsurance capacity and will gain a competitive edge by writing more profitable new business and renewals.

About Chrp Technologies

Chrp Technologies helps home insurance companies build great relationships with their insureds. Our proprietary AI products deliver loss prevention and enhanced customer experience. Learn more at


1Hattle-Cleminshaw, A. (n.d.). Smart home water monitoring devices prevent property damage.

2NFPA report - home electrical fires. (n.d.).

Tags: Personal Lines, Technology, Data & Technology, Homeowners, Data/Tech, AI, Artificial Intelligence, CHRP Technologies

Micah Kalisch

Written by Micah Kalisch

Micah spent 20 years in construction before starting a career in the homeowners insurance industry. He pioneered the design and development of a transformative loss prevention program for a top southeast insurance company. His combined experience in construction and insurance led him to founding Chrp Technologies, the leading AI-powered home assessment company in the personal lines space, where he is currently CEO.

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