Must-have for insurers to underwrite overland flood

Artificial intelligence and data analytics is one reason some Canadian insurers are underwriting residential flood coverage, speakers said Tuesday during an industry conference.

“Here is an opportunity that we took to really look at the massive data sets we worked with,” Barbara Bellissimo, senior vice president of Desjardins General Insurance Group, said during Tuesday’s Insurance Analytics Canada Summit.

She was referring to DGIG’s flood product, launched in 2017. That was when DGIG launched several optional add-ons to home insurance coverage, including loss arising from water that originates from the rising or overflow of a body of water or from a dam break.

To underwrite the product, Desjardins worked with universities and its own data analytics experts to develop a risk model, Bellissimo suggested Tuesday during a presentation titled Bridging the Gap Between Business Needs and Analytics Applications: Meeting Customer Demands at Scale. “What we did here is provide 95% of our clients with the opportunity for flood coverage because of the robustness of what we were able to create.”

The Co-operators was among the first Canadian property and casualty insurers to start offering overland flood coverage on home insurance in 2015. Until then, overland flood was generally unavailable.

“Our flood product contains a lot of artificial intelligence,” Clement Brunet, research and analytics director for The Co-operators Group Ltd., said during the summit, which wrapped up Wednesday.

The flood risk of “every house” is “evaluated by our team of data scientists,” Brunet said Tuesday during a presentation – titled Artificial Intelligence: What you must tell your CEO.

The summit was produced by London, England-based Insurance Nexus.

AI was mentioned for the first time in a Co-operators strategic plan in 2014, Brunet said.

“If you asked our directors and our executives what they wanted [from AI] they didn’t know,” he said. “They just said [in 2014], ‘It needs to be part of our strategy. We don’t know what it means but let it be there.'”

As of June, 2018, 16 insurers representing 77% of the market offered overland flood coverage to Canadian homeowners, Craig Stewart, vice president of federal affairs for Insurance Bureau of Canada, told Canadian Underwriter at the time.

A lack of flood models was one reason carriers were reluctant in the past.