Since drones’ inception in the commercial world, every industry is imagining ways in which unmanned aircraft systems (UAS) could transform their business. Insurance is no exception. Insurers are reimagining their claims and underwriting processes to reduce manual interventions for inspections by leveraging drones, thereby improving efficiency and reducing cycle time.
According to the Federal Aviation Administration (FAA), sales of UAS for commercial purposes are expected to grow from 600,000 in 2016 to 2.7 million by 2020. Accordingly, the FAAs allocated USD 63.4 billion for the modernization of the United States’ air traffic control systems, as well as an expansion of airspace to accommodate the commercial use of drones.
Drones, powered by autonomous systems, have the potential to deliver immense benefits, coinciding with insurers’ ongoing transformation of their business models from settlement to prevention.
Potential for claims analysis & settlement
Leveraging drones for aerial inspections could dramatically increase adjuster productivity by automating activities such as data entry and even roof climbing. Roof insurance claims due to weather damages account for a large portion of claims. In addition to the cost associated with the damage, the cost of processing and closing the claims can be phenomenal. Property and casualty companies are turning to new technologies powered by drones to improve efficiency, reduce costs and increase ROI when processing roof damage claims.
With drones, multiple site visits in person are not necessary. The need to calculate costs manually no longer exists, as this is done automatically. Thankfully, with drones your adjusters no longer need to climb on roofs, therefore substantially increasing worker safety.
Huge returns come from how the use of drones affects loss measurement accuracy. Earlier, adjusters were likely to over-measure approximately 5% of the roof area, leveraging conventional measurement and approximation techniques. Now, with the rich data from sensors and the field of view offered by drones, measurement errors could be reduced significantly, resulting in more accurate claim pay-outs.
In the event of a catastrophe, drones enable you to access hard-to-reach locations for damage evaluation and to facilitate faster claims settlement. Previously, insurers’ efforts to help claimants with speedy settlements were sometimes hampered by adverse conditions, with access problems making it hard for adjusters to reach the scene. But drones can handle numerous cases within a geographic zone in a short time and eliminate risks to the field agents.
Impact of image & data analytics
The complementary analytics of environmental data from external sources – which drones can help capture — also provide opportunities for optimizing operations. For example, in case of a hailstorm, the policy administration system can determine the households potentially impacted by hail damage. Based on the proximity of the location, autonomous drones designated to handle the area can take off and set course to cover households in a particular storm travel path.
With image processing, communication techniques and weather data analysis, the drone automatically identifies and assesses damaged areas. The insurer’s claims management systems, with data provided by the drone, will be able to calculate the replacement cost and initiate pre-settlement of any claims.
In another implementation, sensors attached to a home can provide additional information, either to trigger a visit by the drone or as inputs to settlement. For instance, water leakage, temperature variation, fire, etc., can be detected via sensors deployed in the home and can trigger quick inspection by the designated drone. This will aid insurance companies in assessing any subsequent losses posed by the roof damage.
Such implementations would create a revolutionary claim settlement experience, both for insurers and for insureds, with quantum leaps in operational efficiency.
Next steps?
To gear up for the exciting journey ahead, you need to invest in the right infrastructure, processes, and capabilities, and define robust business strategies to support the use of drones. Evaluate the benefits and limitations of using drones by choosing a few use cases to conduct field trials.
Drones promise disruptive potential for insurers at a time of sluggish growth. Make drones an integral part of your innovation ecosystem to boost productivity, reduce costs, and enhance customer experience.
By Fridtjof Detlefs
Fridtjof Detlefs is Head of Insurance Practice – Continental Europe at TCS
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