Insurers should look at drones as part of a bigger ecosystem
Insurance organizations should view drones as part of a wider set of such disruptive technologies as IoT, blockchain and AI.
Insurance carriers have been quick to seize upon the potential of commercial drones to improve operational efficiencies in processes such as claims adjudication and to provide rich data that can enable them to make better risk and pricing decisions. With drone technology rapidly maturing and the regulatory environment evolving, insurers should now look at the role drones can play in their wider ecosystem and product strategy.
For the past five years or so, insurers in North America and the rest of the world have experimented with drones for applications ranging from roof inspections to assess damage claims to surveying farm fields for more accurate pricing of crop insurance. These early applications have shown that drones offer a range of operational benefits.
Some insurers deployed drones over parts of South Carolina and Georgia in the wake of Hurricane Matthew in 2016 to expedite claims assessments. Not only can drones be rapidly mobilized following a natural disaster, they can be sent into unsafe areas such as fire-damaged buildings or places where chemical toxicity is suspected. They can also be used to spot issues that cannot be easily seen from ground level.
InsurTechs and insurance carriers alike have also spotted the opportunity to offer drone cover for recreational fleets and commercial fleets. For example, insurance carriers are partnering with startups to provide pay-as-you-fly insurance to commercial and recreational drone pilots. Some InsurTechs, meanwhile, offer drone insurance on an hourly or monthly plan.
Regulatory constraints falling away
This is just the beginning. Some of the regulatory constraints hampering wider use of drones are starting to fall away, paving the way for interesting new applications. The FAA earlier this year granted one carrier a national drone flight waiver that allows the insurer to fly drones over people and beyond visual line of sight through November 2022.
What’s more, big tech and logistics companies are moving ahead with proof of concepts and pilots to test drones for short-distance deliveries. There is also an explosion of interest in drone services such as 3D mapping and aerial photography in industries such as infrastructure, architecture, civil engineering, and oil & gas.
As more specialist drone operators take to the sky, insurance carriers should evaluate whether they want to manage their own fleets and pilots, or whether they should leverage the expertise, operational efficiencies and technology of their ecosystem partners. Carriers already have the option of hiring insurance drone pilots with their own drones through gig economy platforms such as WeGoLook.
As logistics and tech companies scale their fleets, it might make sense for them to offer insurance carriers access to the images and data for purposes such as underwriting. In time, these companies may have wide enough coverage to send a drone to get aerial images within minutes of a commercial or residential customer making a claim for hail or fire damage, for example.
Partnering with specialists
Some companies are already targeting this opportunity — for instance, using a fleet of fixed-wing aircraft and drones to capture multi-directional aerial imagery. The data can be delivered through underwriting software. And insurers are partnering with drone-analytics providers to optimize and expedite claims during hurricane season via aerial data investigation.
The next step will be for insurers to start working with tech partners and other members of the ecosystem to win a slice of the rapidly growing drone services market, which is forecast to grow in value from $4.4 billion in 2018 to $63.6 billion by 2025.
They could, for example, use drone data and their risk management expertise to help clients better mitigate risks. Drone data collected during routine flyovers and analyzed using artificial intelligence (AI) tools could be used to inform commercial property owners of a roof that needs maintenance or a potential fire hazard.
New ecosystems and products
They could even look at a surveillance-as-a-service concept that uses drone data to alert homeowners to issues such as fires or potential property breaches. The privacy and regulatory issues are thorny, but if they are resolved, one could imagine a smart home offering that wraps together security, surveillance and insurance in a single bundle.
Insurance organizations should be looking at drones as part of a wider set of disruptive technologies — the Internet of Things, blockchain, and AI — and asking where they will play in the emerging digital ecosystem. Some questions they can ask include:
- What lines of our business can benefit most drones today?
- What drone-collected data could we benefit from and what is the best way to harvest it?
- What are the necessary ecosystem partners or drone data providers we want to work with?
- What are the most promising ideas for using drones to add value to the experience we offer our customers?
Werner Rapberger is a principal director in Accenture’s Customer Insight & Growth Practice for insurance. He is responsible for various clients and projects in insurance and also leads the global offering development for connected insurance and IOT insurance. You can contact him here.
These opinions are the author’s own.
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