Hurricane season drives mass adoption of insurance drones

With natural disasters such as hurricanes, careful planning and the fast reactions enabled by that planning are critical to safe first response and a fast claims process, all of which speeds up the rebuilding process.

The insurance industry is ready for drone technology because it does just that: it enables faster claims processing, a reduction in loss adjustment expenses and improved claims adjuster safety.

The first significant use of drones in the industry was in response to superstorms last year, after Hurricane Irma in Florida and the Caribbean and Hurricane Harvey in Texas. Both storms resulted in major loss of property and life:

• Harvey left $200 billion in damages and over 91 deaths in its wake;
• Irma resulted in $65 billion in damages and over 134 deaths.

With 2018 expected to be another year of major storms, and no letup expected in the future, insurance companies now have a quicker, safer way to process claims. In fact, drone technology is anticipated to have a $6.8 billion impact on the insurance industry.

Three key benefits of drone technology

How exactly does drone technology aid insurance companies in storm recovery/?

To start, drones enable pre-planning so that disaster response can be faster. Pre-staging is often done in advance of hurricanes. Insurers can train drone operators before the storm hits, as well as stage drones with local teams ahead of time so that they are prepared to respond as soon as conditions have improved. Effective planning is the best way to ensure seamless, fast response.

Drones are also able to perform site surveys much faster than traditional methods (which involve sending claims adjusters up on roofs with ladders). With a drone, inspection can be done in just 10 to 15 minutes, speeding the way to processing.

Drones reduce loss adjustment expenses (LAE) by gathering unbiased condition data quickly, reducing and even eliminating the need for third-party vendors to provide costly ladder assists or perform roof inspections. Insurers will be able to differentiate from the competition by reducing their claim cycle times as much as 80%, keeping their clients happy. Taken together, better planning, faster and more efficient inspections, and reduced third-party costs all mean that property owners will rebuild as soon as possible after a storm.

Worker safety is also vastly improved for insurance companies using drones. Manual inspections require adjusters and inspectors to climb on roofs to assess damage and take measurements, and it’s one of the United States’ most dangerous jobs. The average cost of a fall from an elevation is $50,000, and a workplace fatality costs on average $910,000 per incident [U.S. Department of Labor]. The risk is only compounded in disasters such as hurricanes, when conditions are even more unstable and dangerous, and there is pressure to complete inspections quickly.

Drones are ready for mass adoption

Several developing trends are proving that drones are maturing as a technology, and the insurance industry is primed for mass adoption. We’ve already seen the emergence of purpose-built drone solutions created specifically for insurance applications, including “full-stack” packages that enable end-to-end solutions for claims processing. And regulatory frameworks are being established on a national scale, making it possible for companies to adopt the technology quickly and legally.

Advances in unmanned aerial technology complement claims processing workflows that are in place today, so they won’t require major process changes to adopt. The data collected by drones can be easily shared with existing systems. Claims adjusters’ workflows have already been made 40 to 50% more efficient by employing drones. Comprehensive end-to-end solutions such as autonomous systems are being developed using drones with artificial intelligence (AI) and machine learning (ML). With these advancements, drones will automate manual tasks on a greater scale, helping insurers prioritize for accuracy and efficiency.

We’ve already seen several drone system manufacturers become recognized as a trusted partner in the insurance industry. With a deep understanding of the business, they are acting as an advisor to insurers, offering guidance and providing implementation services with training and support. This advisor role better supports large-scale, in-house programs and helps industry innovators “future-proof” their technology investments.

Early adopters are proving their success with drone technology. “We believe our new drone program will help improve response time and safety for our claim representatives during their evaluations, and ensure Farmers maintains a leadership position in the insurance industry,” reported Keith Daly, Chief Claims Officer at Farmers Insurance.

Staying ahead

Every company needs to adapt with changing customer demands and innovate with the latest technologies to stay ahead of their competitors, and insurance is no different. Drone technology is the logical next step for many insurers in order to stay ahead of the curve.

Drones allow insurance companies to increase their claims processing speed with faster, more efficient inspection methods that deliver more accurate, unbiased results. Insurers are also able to reduce their LAE by completing more claims per day and eliminating ladder assist for steep and high inspections. And since drones eliminate the need for manual inspections on rooftops and compromised structures, worker safety is greatly improved.

All of these benefits have been established and proven in the field during storm recovery, particularly in the aftermath of Hurricanes Harvey and Irma in 2017. With hurricane season gearing up for 2018, these types of natural disasters are sure to be an important driver of drone adoption in the insurance industry in the coming months — something key government officials agree on.

“I don’t think it’s an exaggeration to say that the hurricane response will be looked back upon as a landmark in the evolution of drone usage in this country,” said Michael Huerta of the Federal Aviation Administration.

Nathan Stump is the director of product marketing at Kespry. Contact him at nstump@kespry.com.

See also:

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