A good and fairly quick read - and with an appreciated lack of pop-ups and pay walls
Lots of interesting things in there. The AI and concepts of insurability (or not) sticks with me. It really strikes home as an inspector with contractors coming behind us. Sure, they can do what’s really needed and right - repairs on a system or item. But they are then on the hook when the repair (or any associated work of others) fails. Or, they can get better money with essentially no liability for a full replacement.
Contractors are in demand so it’s no wonder every time an electrician comes to replace a faulty GFI he “can’t believe” the home inspector didn’t say the whole house NEEDS to be rewired.
Similar thing with insurance… what’s the downside of just cancelling people with even the slightest risk? Sure, some lost premium revenue but I’m sure the actuaries are happy to see them go.
Say you’re selling health insurance - would you love the data of the people leaving the McDonald’s drive-thru… and that of leaving Planet Fitness to decide who to offer coverage to? I’m only half kidding… that’s probably already happening.
Good article but it is based around using AI to reduce their liability instead of AI is only one method they improperly use to reduce their liability and escalate premiums.
One of the other improperly used tools they have is the Consolidated Loss Underwriters Exchange (CLUE) database. It is also something the writer made no mention of as it ties in with this AI problem as well as all other improperly used tools. Is the writer aware of CLUE and how this AI reported problem will definitely affect them behind the scene in ways they might not realize? CLUE is used by underwriters to determine not if if they will even cover a home but also to what extent and the cost of the premium to do so. One large problem that comes with CLUE, and there are so many, are prior water damage claims. A homeowner can have true professionals come in to repair/remediate the water damage, and those results can be in CLUE, and yet the underwriters will still look at the home skeptically and cause issues with coverage.
Everybody who can think understands that insurance companies are a business that is there to make money and paying out claims loses money. We get it! However the insurance companies caused their own problems by decades of lax operation costing them untold amounts of unnecessary losses and homeowners unnecessary premium increases and coverage issues!
The insurance companies are so out of control anymore and no government agency from local, State, or Federal actually gives a damn about it! The governments that want to stick their noses where it doesn’t belong refuse to stick their noses where it does belong! Until they do this and many other insurance issues will continue. Of course the governments love AI and we all know with its capabilities it will be improperly used by them as well!
The insurance companies are using AI, site visits, photo reconnaissance, drones, telepathy, crystal balls, anything they can to reduce risks. I don’t have a problem with that; it is just good business sense on their part. My problem, which the article touches, is that the process is almost entire opaque to the end customer and when the axe falls it is a cold-hearted body-slam to the mid-section. Plus, it seems like every insurance company and employee within those insurance companies are doing it a bit differently, making it seem like the decisions are arbitrary.
There is another problem that the article does not address. The insurance companies are generally more accommodating when taking on new clients and adding to existing policies. So, clients think they are good, their new house is insured and they are in the clear. Not so. The new policy may get put in the cue for further scrutiny and the cancellation notice can come only a few months later.
I don’t know about the rest of you folks, but my reports each have the phrase “please talk to your insurance company” at least a half dozen times associated with defects I know could cause problems with insurance underwriters. I do not want to be blamed when, months or years later, the insurance company becomes aware of the risk and either significantly raises premiums or cancels the policy.
The increasing reliance by insurance companies on artificial intelligence is the result of a severe shortage of natural intelligence within its industry.
Very good points especially the bold part. I have a generic statement in an additional info section at the beginning of the report about insurances. If I find issues that might affect insurance I do tell the client how the system works and the insurance companies will bind a policy on anything until they look at it themselves.
Clients fall in love with the house and tend not to think of these things even after they are told in writing (the report) and verbally on site. That is where the Real Estate Salespeople come into play if they would only do their job to ensure the client understands and drill it into the buyers head multiple times until they do have the carrier review the home prior to closing.
I have been considering doing the same. Talking about insurance is a bit outside the SOP. However, I think our first obligation is to our client and, in many parts of the country, acquiring and maintaining insurance coverage is a real concern.
