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Drones are becoming widely used in a variety of industries, including insurance. As mentioned last week, millions are expected to be sold in 2017 with PwC calculating the global market for the commercial application of drones at over $127 billion. So how are insurers using drones right now and what opportunities are arising?
Though drones could theoretically benefit many different aspects of insurance operations, to date the most common application has been roof inspections conducted by certified insurance assessors before payment is made on claims for storm or hail damage. Traditionally, assessors use ladders to climb onto roofs, and sometimes need harnesses if the roof is high or steep enough. A manual inspection can take half a day.
A 20-minute drone inspection captures around 350 images of the property in question, and provides data that can be used to identify moisture trapped in roofs, produce 3D models and elevation maps, calculate flood or wildfire risk, and derive property measurements.
This gives insurers several good reasons to carry out these drone inspections. Here are some notable examples in the area:
- Erie Insurance, an American traditional insurer active in the auto, home, commercial, and life insurance sectors, is generally credited as the first insurer to use drones to inspect roof damage. It received approval from the American Federal Aviation Authority in the spring of 2015.
- Betterview is an insurtech devoted to using drones for property inspections. The company announced this April that it had executed 6,000 rooftop inspections in the last two years, and then signed a partnership agreement with Loss Control 360, which makes software for insurance carriers and inspectors. “We have seen insurers allocate budget dollars in 2017 to move from concept to real production use,” Betterview CEO David Lyman told the Insurance Journal. “In 2018 we expect to see a significant ramp up in the use of drones by insurers and reinsurers.”
- Travelers has used drones to inspect damaged roofs since 2015. The carrier provides insurance-specific drone pilot training to its claims teams; by May this year it had trained 150 pilots and expected to train hundreds more before the end of the year.
But it’s not just roof damage that drones are being used for.
Beyond roof inspection
The French global insurer AXA reported in 2016 that it was using drones in a variety of applications in France, Switzerland, Belgium, Mexico, and Turkey. The business case is simple— to assess claims, drones can go places that are risky for humans: into fire damaged buildings, into places where chemical toxicity is suspected, and into manufacturing plants or other areas that have been subject to natural or other disasters.
AXA is developing tools and platforms to use drone images more efficiently, including this new data source into its claims adjustment processes.
Coupling imaging technologies with advanced analytics is proving useful across industries. Drones are being used in disaster management, geographic mapping, crop monitoring, supply chain monitoring, storm tracking and weather forecasting, to maintain power lines, monitor traffic flows and for surveillance—all instances that may assist insurers to dynamically adapt and innovate on insurance products and risk cover, especially for short term cover.
Country Financial is, for example, using drones to identify issues in fields which are hard to spot with just ‘boots on the ground’. It says its crop claims adjusters using drones can scout three times as many acres as an adjuster on foot. This technology also gives farmers more information to consider when choosing how much crop insurance coverage they need, says the company, and it means more insurance plans can be based on an enterprise-level data rather than county numbers.
Evolving drone technology
While these examples provide a snapshot of the growing use of drones in P&C insurance inspections, they also highlight some of the limitations of current applications.
Regulators require drone pilots to maintain line-of-sight during a flight, limiting the range of a drone’s flight. New regulations—and wider use of fixed-wing drones—could dramatically boost this range, with corresponding increases in the amount of property a single flight could cover. Technology and regulation could also conceivably enable greater autonomy for drones in the future, allowing a single pilot to oversee multiple drones at once.
A recent Businessinsider.com article highlights the emergence of generation seven of the technology with the announcement of 3DRobotics’all-in-one drone, Solo. These next-generation smart drones have built-in safeguards and compliance tech, smart accurate sensors, platform and payload interchangeability, automated safety modes, enhanced intelligent piloting models and full autonomy, full airspace awareness, auto action (take-off, land, and mission execution). Imagine the future opportunities these drones will open up for insurers.
Of course, there’s another major opportunity for the industry: providing coverage to drone users. Come back next week for a look at some of the insurance products now available to drone users of all types.