Delos Insurance uses AI to assess risk and offer homeowners insurance policies in wildfire-distressed parts of California.
SAN FRANCISCO — California’s wildfire-driven insurance crisis has left many homeowners scrambling for coverage, but a San Francisco company says its artificial intelligence model is helping fill the gap.
Delos Insurance Solutions, founded in 2017, is offering policies in high-risk areas where major insurers have pulled back. CEO Kevin Stein and Chief Data Officer Shanna McIntyre co-founded the company after seeing the industry’s struggle to adapt to climate change. Both came from aerospace. McIntyre’s background is in predictive modeling.
“We started the company when we recognized that the insurance industry really was not prepared for climate change-driven wildfires,” Stein said.
With a team of data scientists, software engineers, top wildfire experts and other specialists, Delos developed a proprietary algorithm – or model, artificial intelligence – with more than 200 variables, to determine a home’s wildfire risk. Delos began providing home insurance policies in 2020.
McIntyre said the model considers factors like vegetation type and health, fire weather and community fire suppression resources.
“What we’re finding is that our view of risk is actually far more optimistic than the view of risk of a lot of other carriers, based on having this much better understanding,” McIntyre said.
That means Delos often insures homes in areas where most companies won’t, including Grass Valley and Nevada City. Across the state, hundreds of thousands of homeowners have been left with no option but the California FAIR Plan, the bare-bones, high-cost insurer of last resort.
According to Stein, Delos’ model considers two out of three homeowners struggling to find insurance as safe to cover. So far, the company insures about 30,000 homes statewide.
Delos operates in California’s non-admitted market, where companies are not backed by the state if they go insolvent. That market often comes with higher premiums, but Stein said Delos’ in-depth modeling allows the company to avoid sharp price swings.
“For insurance companies or wildfire models that don’t understand wildfire risk and the ways in which wind and weather, for example, are impacting wildfire, then you either can’t participate or have to build in extra price because of the uncertainty,” Stein said. “With our modeling, we do understand what the risk is; therefore, we can actually price to the risk, as opposed to building in that uncertainty.”
Policies sometimes cost less than the FAIR Plan, Delos said, and include coverage for water damage, theft, liability and wildfire — broader protection than the FAIR Plan provides.
“When we sell a policy, we want to have everybody feel very comfortable we are going to be their insurer for the long haul,” McIntyre said.
The California Department of Insurance said it expects more admitted carriers to return to the state as reforms take effect. Until — and after — then, Stein said Delos remains focused on covering hard-to-insure homes.
“Shanna and I started this company with the entire purpose of solving the coverage gap problem in California. We’re from California. This is our home,” Stein said. “We want to solve this problem, and we believe it requires being highly specialized and highly focused.”
Delos policies are sold mainly through independent agents. If an agent is not yet appointed with Delos, the company said they can be in just a few days.
Someone interested looking into Delos can check with their insurance agent/broker or visit the Delos website, where the company can connect a homeowner with an agent.
Source: https://www.abc10.com/