Drone Wars: Insurers take to the skies
Technology has revolutionised the way we work throughout all industries, and the insurance sector is no different. Big insurance companies are always after the next shiny new InsurTech product to add to their arsenal, and one prominent example, drones, look set to become a staple of insurance practices.
Drones are unmanned aircraft that can either be remotely controlled or fly automatically through AI. These drones are often equipped with cameras and other sensors that can collect data about the weather, temperature, and other environmental conditions.
US insurers were quick to realise the opportunities presented by the use of drones to aid risk management and claim handling. They are already responsible for 17% of all present use of commercial drones in the US and this is expected to rise further as the quality of the cameras and sensors attached to drones increases and huge cost-savings can be achieved.
Drones have the potential to upend the way insurers go about assessing risks. By collecting images and various data from above, insurers have more ways to accurately assess potential risks, especially in relation to home and property insurance. Drones are a safer and more efficient alternative to the use of ladders by adjusters to climb onto roofs and they can collect more data points from which the right insurance cover can be provided.
Claim-handling also benefits from drone-use. They can accelerate how claims are assessed by removing the need to physically attend the damaged property. The insurance market had been highly labour-intensive, requiring claim-handlers to travel between various properties and areas to collect information and assess claims. Drones will make many of these trips redundant, as sufficient information to evaluate most claims will be collected from the comfort of the insurer’s office.
The benefits of drone-usage are most pronounced in catastrophic damage claims. The recent floods in Yorkshire and the Midlands made the inadequacy of current practices clear, as claim handlers could not visit the damaged sites. Drones were put to use, but UK insurers still lagged behind their US counterparts, and there was a shortage of suitable drones. Extensive delays in assessing claims exacerbated the situation for those affected and damaged their relationship with their insurers.
The coronavirus pandemic has only served to expedite the process of drone-adoption. Manual data collection has become harder as people are forced to social distance and claim handlers cannot work from home without the use of technology.
Authorisation for the use of such drones is often necessary and a new market for insuring drones themselves has arisen. Law firms should prepare themselves for the inevitable influx of enquiries relating to both of these from their customers.
More than half a million commercial drones could fill our skies in the UK within the next few years as the demand for more data points has increased. The battle for the skies is truly on and insurance companies that don’t equip themselves with a drone army could be left stranded on the ground.