Aerial imagery tech used in CSAA decision to revoke homeowner insurance

A residential neighborhood in Austin, Texas, US, on Sunday, May 22, 2022. The US pandemic housing boom, marked by record price gains and coast-to-coast bidding wars, is finally reaching its limit. Photographer: Jordan Vonderhaar/Bloomberg

As the insurance industry increasingly turns to digital technology for underwriting decisions, some homeowners are having policies revoked based on aerial images taken of their property.

One homeowner received a non-renewal notice from CSAA based on images taken of his backyard, showing multiple broken-down vehicles and other clutter, according to reporting from ABC 7 News in California. When he called to dispute the claim, CSAA initially told him that a “drone” took aerial photos of his property. However, CSAA has since retracted that statement.

CSAA public relations consultant Jason Willett told Digital Insurance that underwriting decisions are made using “third-party proprietary aerial imagery captured by fixed-wing aircraft and satellites from Cape Analytics; drones are not used to capture these images.”

“Out of respect for customer privacy, CSAA Insurance Group does not comment on specific situations or policies,” Willett told Digital Insurance when asked about the North California homeowner featured in ABC 7 News. “The properties we insure are carefully evaluated according to our underwriting guidelines. While every situation is different, conditions that may result in a non-renewal could include excess clutter or debris, hazardous waste and dilapidated vehicles or appliances.”

However, a non-renewal notice arriving in the mail doesn’t necessarily mean there is nothing a homeowner can do to try and keep their policy.

“If a policyholder believes that the notice was issued incorrectly or illegally, there’s usually an appeals process within the insurer themselves that they can appeal to,” said Michael Berry, chief communications officer at the Insurance Information Institute. “There’s usually a notice in the non-renewal form that the person gets, which explains to them how they can go about appealing it.”

Berry also stated that the use of aerial imagery in insurance underwriting has become increasingly prominent in the last 10 to 15 years, especially after Hurricane Sandy.

“Insurers use aerial imagery to make inspections efficient, [since] homeowners don’t have to be present and inspectors don’t have the hazards of going on roofs,” said Janet Ruiz, director of strategic communications at the Insurance Information Institute. “Inspections are common when a new policy is purchased, reinspecting homes and inspecting when a loss is reported. Aerial inspection is one of many tools in use by insurers.”

Insurance experts also noted that the decision to not renew a homeowners policy is not taken lightly by the insurer, and in some cases the non-renewal is reversible.

“The insurer issues a non-renewal notice with great reluctance,” Berry said. “They are in the business of writing insurance and they want to expand their market share in most states most of the time. I think a policyholder who gets a non-renewal notice and wants to stay with that insurer, if a good faith effort is made to remedy whatever problems are on the property,  may find success in getting their policy renewed.”

CSAA partnered with Cape Analytics in 2019 to use its “advanced AI technology… to more quickly and inexpensively assess the condition of member homes” according to the official press release. 

“Cape Analytics provides insurance carriers like CSAA with loss-predictive property characteristics and condition assessments based on aerial and satellite imagery collected by third-party imagery suppliers,” said Kayvan Farzaneh, head of marketing at Cape Analytics. “Cape provides carriers with data extracted from those images using machine learning models. While insurance carriers may use Cape Analytics insights to inform policy decisions, our analytics are solely focused on providing objective and accurate property information that is then used by each carrier based on their understanding of risk.”

The rate of insurers not renewing homeowners insurance in the face of increasingly severe natural disasters and inflated costs has skyrocketed this summer, even as some carriers are receiving pushback for issuing non-renewal notices.

“With increasing frequency and severity of wildfires, hurricanes, and other weather events, it is incumbent on the industry to work to reduce the effects of climate change, and [CSAA] strives to be an industry leader on this important work,” Willett said. “To continue offering industry-leading insurance coverage, we must periodically evaluate our exposure to risk. After careful review of our exposure, we continue to offer insurance throughout Northern California as long as our underwriting criteria are met.”