How drone technology will change the world of insurance business

The sphere of insurance is not very popular both among ordinary people and in the business world. From its inception to the present day, insurance is not perceived as a kind of “friendly product”. That is, people are ready to contact the insurance company and agents only when there are problems. And having a problem can mean the inconvenience associated with the claims process due to long and complicated contractual formalities.

It is not our task to find out the reasons for this situation. Insurance existed and exists, and no one questions its necessity. However, global changes are taking place in the insurance industry today, which are usually almost imperceptible to an outsider’s eye, but all specialists who are directly or indirectly related to the insurance system know and speak about these changes. So what are these changes and what is the role of unmanned technologies in them? Let’s try to answer these questions.

From traditional insurance to smart insurance

As a rule, when the relatively recent term “smart insurance” is discussed in the Russian professional community, in most cases they cite car insurance and new remote control technologies used to track the behavior of drivers in order to change the conditions of car insurance based on the data obtained. However, in reality, “smart insurance” is not limited to the technologies described above. Its content is much broader and more interesting than is commonly thought.

The main problem facing traditional insurance is the new quality of services in the era of the digital revolution. With the development of IT technologies, companies began to appear that became competitors to traditional business, including insurance. Google, Amazon and a number of other digital giants have begun to capture new areas of commercial services, which, along with the emergence of the phenomenon of fintech, has put even the leaders of the insurance market in difficult conditions.

Insurance companies are faced with two key questions: how to deal with the technological revolution and how to respond to new customer demands. In the second case, it means that if earlier customers mainly wanted insurance to help victims protect themselves from an emergency, now they want insurance to help them avoid risks. Instead of reactive problem management, companies should shift to prevention and risk prevention (essentially smart prediction and decision-making based on the received accurate data). This is what underlies the concept of “smart insurance”, which is now increasingly based on the Internet of things and big data. They are the ones that allow you to get predictive analytics and improve the quality of customer service.

How is drone technology helping insurance enter the digital age?

Among the growing set of tools for collecting big data, unmanned aerial vehicles have become especially popular in recent years. More precisely, not the UAVs themselves or not only the UAVs themselves, but entire systems and complexes of technologies associated with their use. Although the first attempts to use drones for commercial purposes date back to the beginning of the current decade, however, in the United States, insurance companies and other commercial organizations expanded the scope of drones after the FAA eased regulations specifically for commercial drones.

After that, American insurers began to actively test UAVs and found them useful for settling property claims. After 2016, according to industry participants themselves, drones began to turn into the same common tool for insurance companies as computers or mobile phones.

Initially, the main motive for the use of drones was the desire to save money, increase efficiency and return on investment. However, the situation soon changed, and drones began to turn into one of the integral features of “smart insurance”, which not only protects against risks, but is able to predict them, that is, it does exactly what their potential clients expect from insurance companies.

How insurance companies can use drones

Data collection and analysis

One of the most important and most obvious uses of drones in insurance is the collection, processing and analysis of data on real estate or other objects (cars, the same drones, other property).

A simple example that well illustrates the relevance of the use of UAVs is the inspection of the roofs of buildings (in particular, residential buildings, offices or warehouses). Usually, most people do not really think about the condition of the roof over the house or office: it seems to look normal and okay.

Meanwhile, experienced insurance companies consider roofing as an important element in the comprehensive assessment of real estate when insuring it and when calculating risk. Indeed, with a more thoughtful approach, anyone will agree that defects or destruction of the roof of a building can cause great damage, and therefore, entail an increase in the number of claims and lawsuits. The insurance company will have to cover the costs, and this is not a very pleasant and profitable moment for the insurance business. The quality of the roof also affects the amount of insurance. Poor quality roofs are riskier for insurance companies, so they charge higher premiums as compensation.

As a rule, insurance companies, whose package of services includes real estate insurance, have been collecting data on the integrity of the roof for decades. This information is taken into account when forming the insurance package and pricing. If the insurance company has data for a long period, the integrity of which is not in doubt, and even if they are obtained at a high price, then after formalizing the contractual relationship with the client, the insurer can save on long-term costs in claims.

A detailed survey of the roof with the help of a drone helps the insurance company avoid risks and unnecessary costs when drawing up a real estate insurance contract
A detailed survey of the roof with the help of a drone helps the insurance company avoid risks and unnecessary costs when drawing up a real estate insurance contract

How can you collect such data on the condition of the roof? In two ways: by sending specialists directly to the object to examine the condition of the roof, which is expensive and dangerous, or by using a drone (or a pair of drones) together with 1-2 specialists to collect data remotely with minimal risks and costs.

Instead of risking a person’s life and health by sending them to high altitudes, an insurer can send a special drone equipped with one or two cameras (for example, a high-focus visual camera and a thermal camera) for a thorough study and collecting accurate data. This will eliminate human error, reduce costs and shorten the time to complete the job. Finally, accurate data will be obtained in return. moreover, they can be obtained even in real time, if the situation so requires.

Insured events in emergency situations

Another “typical”, if I may say so, case of using unmanned systems for the purposes of an insurance company is damage assessment after an emergency: a hurricane, flood, major fire, etc. As a rule, insurance companies must quickly and accurately assess the damage and pay the sums insured for the claims of the victims: individuals and legal entities. The complexity of the operation and its scale depend on the number of insured events and the severity of the disaster. In most cases, this is a rather difficult task. Insurers need to put in a lot of effort and use the full range of tools at their disposal to help their policyholders.

Even an outdated model of the DJI Phantom 3 quadrocopter with a camera on board is able to give a detailed picture of the situation after the emergency.
Even an outdated model of the DJI Phantom 3 quadrocopter with a camera on board is able to give a detailed picture of the situation after the emergency.

Often, after a disaster, areas are not always accessible to local adjusters who want to assess the damage. Drones allow insurers to quickly obtain information on the spot about the degree of damage, but at the same time carry out assessment operations remotely, without risking the health and life of the specialists themselves.

However, the question has another interesting aspect. Drones can help assess the situation in an area before an emergency so that insurers can make decisions on customer claims. However, this is a separate and more complex issue that concerns disaster prediction and the feasibility of building various commercial and residential facilities in high-risk areas.

Does an insurance company need its own fleet of drones?

This article does not attempt to convince insurance companies to purchase drones. It only sets the task of showing the possibilities and some directions of using new technologies (by the way, not all directions are shown here).

As for the issue of acquiring their own aircraft, the insurance market companies already have a choice. Someone can afford not only the purchase of a drone, but even the creation of a special UAV department and staff training. Others are unable or unwilling to do so. In the latter case, you can go the simpler way – hire specialists from a company that provides aerial photography services using drones. Today, not only abroad, but also in Russia, there are more and more such companies that can rent a drone or perform work on your order.

As a result, insurers are not required to develop, maintain and maintain their own fleet of drones. In general, drones are seen as a legitimate business tool as they provide an opportunity for large companies to increase productivity, ROI, and safety for staff.

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