ZestyAI Launches AI-Powered Pre-Fill Data Product for Rapid Compliance with California Wildfire Regulations
Today, ZestyAI, the leading artificial intelligence property risk analytics company, best known as the developer of Z-FIRE™, has announced the launch of CA Compliance Pre-Fill. CA Compliance Pre-Fill is a cost-efficient way for insurance carriers to comply with recently approved regulations from the California Department of Insurance (CDI) aimed at mitigating the impact of wildfires on insurance policies. It builds upon the regulatory success of Z-FIRE, the first AI climate risk model to be used in an approved rate filing by CDI, and helps admitted carriers achieve a revenue-neutral filing by substantiating a base-rate adjustment.
The CDI regulations "Mitigation in Rating Plans and Wildfire Risk Models" was signed into law on October 14, 2022, and gave carriers 180 days to refile. The regulation requires insurers to provide discounts based on 12 mitigation factors to consumers who take steps to protect their homes and businesses from wildfires. ZestyAI leverages AI technology to scan a carrier's portfolio and quantify the exact impact pertaining to each of the factors mandated by the CDI for every property. This data helps insurance carriers comply with these regulations quickly and efficiently, reducing the operational burden on their businesses, alleviating the need for costly on-site inspections, and improving customer experience.
"Our AI technology allows insurers to incorporate the 12 mandatory risk factors required by the regulations quickly and accurately, while also providing them with the data they need to file a base rate offset for discount-driven revenue losses," said Attila Toth, Founder and CEO of ZestyAI. "With insurers on the clock to refile by the April 12 deadline, we are providing much more than a product to address the regulations. We support the filing process with data, a structured filing playbook, expertise, and implementation support."
To determine the appropriate discount, insurers must consider 12 mandatory risk factors. These factors include the clearing of vegetation and debris from under decks and within five feet of the building, as well as the use of only noncombustible materials for fences and gates within five feet of the building. Having a Class-A Fire Rated Roof, enclosed eaves, fire-resistant vents, multi-pane windows, and at least six inches of noncombustible vertical clearance at the bottom of the exterior surface must also be taken into account. The regulations also factor in the removal or absence of combustible structures, such as sheds and other outbuildings, within 30 feet of the building and compliance with Section 4291 of the Public Resources Code, which requires homeowners in some areas to develop defensible space by removing nearby ladder fuels. Finally, insurers must factor in whether the structure is included in a Firewise USA site or listed as a Fire Risk Reduction Community by the Board of Forestry.
ZestyAI's CA Compliance Pre-Fill product provides data on all 12 factors and offers several advantages over other compliance methods, including expediting a truly revenue-neutral filing. By automating the compliance process, carriers can avoid costly inspections and surveys and maintain a positive customer experience by avoiding unnecessary policyholder interaction.
CA Compliance Pre-Fill can be used independently, or in conjunction with Z-FIRE, ZestyAI's predictive, property-specific wildfire risk model. Z-FIRE uses AI algorithms trained on more than 1,500 wildfire events across 20 years of historical loss data to provide a level of accuracy and detail that is of essential value to both the insurer and the homeowner. The model considers features such as topography and historical climate data in combination with factors extracted from high-resolution imagery of the property itself and its surroundings, including homeowner and community mitigation efforts, to provide both neighborhood and property-specific risk scores. A recent report by Milliman showed that Z-FIRE offers 10x the predictive power of a traditional model for assessing wildfire risk in California. When combined, CA Compliance Pre-Fill and Z-FIRE create a full solution for insurers to manage wildfire risk with increased transparency and fully meet the latest California regulatory requirements.