As climate change moved to the forefront of problems the world was trying to solve, the corporate and economic world moved towards socially responsible investing that, in a sense, incentivizes corporations to make more sustainable choices across their environmental impact, the way they promote socially good mores, or how they govern and fairly structure their company.
ESG, or environmental, social, and corporate governance, are the three factors that measure the sustainability and ethical impact of a business — and represent a major way that today’s top insurers are measured, with many public carriers having an explicit ESG commitment.
Of course, it’s hard to forget about the impact of climate change in insurance, ESG or otherwise. With carriers today hard-pressed to operate faster, cheaper, easier, stronger than ever in the face of more and more frequently and severe natural hazards, climate is easily the number one concern, and the cost of getting it wrong can be devastating, resulting in insolvent companies and policyholders left hung out to dry.
There are many ways to tackle ESG commitments, from LED light bulbs in offices, reducing waste from disposable coffee cups, all the way to eliminating the emissions from operating a building by promoting more work-from-home policies. At Arturo, we utilize these methods, too. As a fully remote workplace, we limit our use of office space and electricity, and our lack of commuters also limits our use of fuel and subsequent pollution.
And while LEED-certified buildings and the like are impactful, it’s equally important to reconsider how business is currently done and evaluate the environmental impact in the day-to-day.
Today’s Insurance Environment
Traditionally, insurance companies have operated on a bedrock of reliable manual processes. From the in-person inspection at quote and underwriting to the adjuster that comes to the house after a damaging event, the evaluation of the risk of a house and its subsequent losses were conducted by the most sophisticated technology we have: a person. This methodology was created in the pursuit of accuracy: knowing exactly what a house is about and how to gauge its risk level.
On-site inspectors and adjusters are experienced in what they do, but they do come with a significant cost: the car they drive. For every visit, emissions are exhausted, be it a driveby inspection or a walkaround.
In recent years, with the housing boom, the number of homes sold — and thus the number of policies underwritten — have gone up as well. According to the National Association of REALTORS®, 4.7 million homes were sold in 2019. In 2020, that number increased to 5 million, and in 2021, it increased again to 5.4 million. With the sheer volume of new homes and subsequently new home insurance policies, it’s easy to imagine the ballooning effect of emissions as a result.
Tomorrow’s Insurance Environment
The advent and adoption of new technologies in remote sensing and artificial intelligence (AI) have opened the doors for new means to achieve a comparable end result. These AI models have been trained to analyze imagery to do the same thing a person does: identify patterns of good or bad qualities in a home.
This field, aptly called computer vision, is revolutionizing the way insurance is conducted. And the best part is, because it’s all done remotely, that means fewer in-person inspections and thus fewer cars on the road. At Arturo, because we partner with multiple imagery providers, our AI models can provide new insights every few months, giving an underwriter the ability to “visit” a property more often than they otherwise would have.
Of course, AI is not without its costs, and we’re only scratching the surface on the complicated nature of measuring carbon emissions. Training a model does use resources like electricity, and depending on how the power was generated, can create emissions. But by developing models that are built intelligently, like reusing existing frameworks instead of building from scratch every time, you can drastically reduce that output. By leveraging green data centers that operate on renewable energy, and by partnering with an AI company that is committed to reaching your goals, carriers can create sustainable intelligence.
Human and Machine, Hand in Hand
Making the most of AI doesn’t mean completely relying on it but rather finding the perfect symphony of human and machine, working together.
With the AI taking a first pass at collecting property intelligence, the roles of employees can be elevated to verify any lower confidence results or handle disputes, giving them the ability to manage their time more effectively (thus lowering costs) and deploy resources only when necessary, ensuring onsite inspections are reserved for cases that truly need them.
With this new model, adjusters and inspectors can conduct most of their work from the desk, which takes cars off the road and reduces spend all without losing accuracy. And in many cases, you can see a property more often than you would otherwise, giving you unparalleled visibility to decide with intelligence.