The 2003 sci-fi classic, Terminator 3: Rise of the Machines starring Arnold Schwarzenegger, had Arnold as an older reprogrammed machine saving humankind from a malevolent AI neural network group mind and intelligent system machine. To succeed, the machine and humankind had to change and rethink how they would challenge these new dangers.<\/p>\n\n\n\n
While humankind is not being challenged by machines, we are challenged with the changing risk, in particular climate risk. NAMIC, Moody\u2019s, The Institutes, insurers, reinsurers and other industry leaders are all talking about a new era of risk and the need to predict and prevent risk, creating risk resiliency.<\/p>\n\n\n\n
Risk is growing, shifting, and becoming more complex. It does not operate in isolation. Gone is its predictability. Risk events are becoming more frequent. There are more combined risks. New risk layers, such as climate, societal, and technology risks add new considerations and complexity. Just consider the following:<\/p>\n\n\n\n
This is unsustainable for the insurance industry. It is unsustainable for banks and mortgage companies, and certainly unsustainable for insureds.<\/p>\n\n\n\n
The insurance industry needs to adapt and change.<\/p>\n\n\n\n
The inaugural Climate Tech event held in Washington D.C. in April provided a venue to discuss how we adapt and change. It brought together insurers, reinsurers, MGAs, brokers, technology solutions, banking, investment banking, and real estate companies \u2014 discussing the impact of climate change, how we adapt, and solutions to meet the challenges. <\/p>\n\n\n\n
The insurance industry is grounded in one fundamental mission: providing protection by managing and transferring risk. Yet today, that mission is being tested like never before. Escalating climate-driven events\u2014hurricanes, wildfires, floods, and other catastrophic events\u2014are not only increasing the frequency and severity of losses but are reshaping how insurers must think about risk itself. <\/p>\n\n\n\n
Likewise, banking is now facing a similar challenge. As was noted in the conference, most banks are underestimating or have no idea what their exposure to climate-related risk is in their loan portfolios \u2013 whether for businesses or personal property. When those loans are bundled up and sold to the securities market, the unidentified risk goes with them, creating potential issues in the markets. What we don\u2019t want is a crisis like we saw with the housing crisis in 2008. <\/p>\n\n\n\n
The risk for each property needs to be assessed, not just for the insured, but for the entire financial system that assumes all or parts of the risk. The interesting reciprocal risk is that managed investments in insurer portfolios often include bonds, securities and property that assume this risk. It could place insurers into double-jeopardy if it isn\u2019t accounted for.<\/p>\n\n\n\n
Fundamentally, all parts of financial services entities \u2013 insurance, banking and securities must recognize and adapt to climate change \u2013 where predictable climate, risk, and weather conditions are no longer a given \u2013 by starting with understanding of and assessing and managing risks proactively. It is an economic imperative.<\/p>\n\n\n\n
In a report by the World Economic Forum, Innovation and Adaptation in the Climate Crisis: Technology for the New Normal<\/em><\/a>, they assessed four data-driven and digital technologies for climate risk including risk analytics, climate-proofing supply chains, risk event responses, and R&D investment in new technologies.[i]<\/a><\/p>\n\n\n\n The report makes the case for adding sea surface temperature data into ocean models that can be leveraged for hurricane assessments, using data from smart cities like smart sewer systems that avert flooding during heavy rainfall, and developing drought-resistant crops. IoT technologies are increasingly being used beyond auto and property for other purposes such as tracking changes in air quality, temperature, and detection of wildfires to help provide alerts for health and safety reasons. Ag tech is also getting into leveraging data to manage agricultural risk, helping to measure weather, rain, and production.<\/p>\n\n\n\n These models are critical to evaluate specific risk, but there is still a need to fully assess the overall loss potential \u2013 something insurers have done for decades with Loss Control Adjusters.\u00a0 The traditional loss control operating models that tactically only assessed risk for high value or high risk properties due to cost of \u201cboots on the ground\u201d\u00a0 can no longer keep pace with changing risk. Insurance loss control<\/a> must adapt and evolve from a tactical necessity to a strategic imperative\u2014one that strengthens risk assessment and profitability while meeting rising customer expectations, and, critically, building long-term risk resilience.<\/p>\n\n\n\n The result of using loss control is primarily for high-value or high-risk properties, is that insurers leave large portion of their portfolios untouched. Likewise, the lack of risk assessment for these properties is unknown by banking concerns. A tiered approach to risk-based loss control could solve this issue by including traditional loss control survey technology, insured self-survey, a contributory database of loss control data, and property analytics. <\/p>\n\n\n\n By leveraging any combination of traditional loss control survey technology with digital self-surveys and videos and advanced analytics to assess the risk, insurers can segment and assess their entire property portfolio cost effectively, either in-person or digitally. More importantly, with these assessments, insurers can use the reports and risk information to identify what customers can do to proactively reduce or eliminate risk and create risk resiliency. It would open an avenue for regular communication and ultimately enhance customer trust and loyalty. It could even, in coming days, fuel an entirely new revenue stream \u2014 as some insurers investigate the idea of monetizing preventive services.[ii]<\/a><\/p>\n\n\n\n Today\u2019s risk demands a different operational model and technology foundation.<\/p>\n\n\n\n It requires embracing technologies that can integrate vast and varied datasets, analyze and learn from emerging patterns, and seamlessly communicate insights and recommendations to reduce risk to underwriters, customers and reinsurers. It is a new foundation for risk resilience\u2014and it\u2019s where Majesco is leading the industry forward.<\/p>\n\n\n\n Majesco Loss Control takes a proactive, AI-driven approach to identifying, assessing and managing risk. By leveraging AI, unique data sources, and advanced models, insurers and even banks, can shift from reacting to risk to predicting and preventing risk across their entire property portfolios. Whether insurers choose to utlize their traditional loss adjusters and\/or digital-first options such as self-survey and video \u2014 they can flex their data muscles use AI in a greater way to manage risk, with decisioning that can vary based on the value and risk of the property. This can all be done with cost-effective options that are customer and risk oriented, help reduce the protection gap, and help garner more favorable reinsurance pricing.<\/p>\n\n\n\n Our integrated platform empowers insurers and banks to create risk resiliency in a world of accelerating and changing risk. The Climate Tech conference is an important step forward to bringing all the key players together \u2013 insurance, banking, securities, reinsurance, technology and government to collectively make risk resiliency real and impactful.<\/p>\n\n\n\n This new era of risk must focus on proactive risk assessment, p<\/em>revention, and mitigation by leveraging data, advanced analytics, and technology \u2014 along with customer communication and engagement, to follow through on recommendations, to drive profitability and customer loyalty. <\/em><\/p>\n\n\n\n [i]<\/a> \u201cInnovation and Adaptation in the Climate Crisis: Technology for the New Normal<\/a>,\u201d World Economic Forum and Boston Consulting Group, January 2024<\/p>\n\n\n\n [ii]<\/a> Cusick, Kelly and Michelle Canaan, Fee-based risk management services can boost insurer revenues in an era of \u2018predict and prevent<\/a>,\u2019 Deloitte Center for Financial Services, April 23, 2025<\/p>\n","protected":false},"excerpt":{"rendered":" The 2003 sci-fi classic, Terminator 3: Rise of the Machines starring Arnold Schwarzenegger, had Arnold as an older reprogrammed machine saving humankind from a malevolent AI neural network group mind and intelligent system machine. To succeed, the machine and humankind had to change and rethink how they would challenge these new dangers. While humankind is…<\/p>\nClimate Tech: A Loss Control Tiered-Risk-Based Approach<\/h2>\n\n\n\n
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