Recently, we attended the Property Insurance Report National Conference (PIR) in Scottsdale, Arizona. One of the standout sessions from this year’s conference was Stephen Schultz (Chief Technology Officer of Pictometry), who pitched the use of aerial drones in the insurance industry.
Drones, or unmanned aerial vehicles (UAVs), have begun to leave a footprint on a national and international scale in recent years. From filming the FIFA World Cup just above the field to producing vivid images of disaster-struck areas, drones have a multitude of potential uses that have just begun to be revealed. One could argue that this is good news for the insurance industry as it could potentially streamline and improve the efficiency in the claims and underwriting processes.
Before any insurance drones can take to the skies, however, there are a few hurdles that must be overcome. First, the FAA is limiting the flight radius of these vehicles, hindering their ability to operate freely. The vehicles are not permitted to operate above 400 feet from ground level, which presents issues in cities like New York where many structures soar much higher. To make matters more difficult, flights cannot be conducted over populated areas, again making claims and underwriting analysis difficult in large cities where this could be implemented. The size of drones must also be under 55 pounds, thus limiting the amount and quality of equipment (such as multiple cameras) that the vehicles can carry, as well as the battery life. Such inhibiting rules would vastly limit the potential for insurance investment in drone technology in the high altitude New York real estate market. While industries such as Hollywood have received exemptions to these rules, it is uncertain whether other commercial industries will be able attain similar exemptions.
Should there be a lift on these regulations, many in the insurance world believe that there is a wide array of practical implementations for drones, such as in property insurance underwriting. Drones that hover like helicopters have unique abilities that other unmanned vehicles (such as remote control planes) do not. Companies could use the hovering ability to get close to roofs to search for leaks and examine structural integrity, and can then bring that data back to the insurers so they can make informed decisions. These quick and efficient abilities will not remove the need for human underwriters, argues Pictometry, but rather make the process more efficient. The vehicles possess the capability to reduce risk on the human side, while creating a degree of efficiency previously unseen. Additionally, the drone can be re-deployed to check on statuses of repairs or other work that requires claims updates. This will provide more data on the efficiency of the claims process that could not necessarily have been accomplished previously. In the insurance industry, we have seen an increase in the value of real-time data with products like Progressive’s snapshot and State Farm’s In-Drive; it is fair to speculate that firms will leverage drones for similar real-time updates on claims solutions and damaged property repairs.
Drones could one day be used in the auto industry as well, such as to assess car accidents from more angles than the human eye permits. Drones have the ability to maneuver around an accident scene without touching or disturbing evidence, and can be operated at heights that provide superior vantage points.
In all, many firms believe that drones have massive potential for the insurance industry. Pictometry outlined such benefits as providing more precise information in an environment that better protects individuals to assess claims and provide underwriting services. Firms such as USAA have begun to probe the government for further testing and training permits that would allow the industry to refine the process to benefit policy holders and firms alike. Previous developments that use advanced imagery technology, like Esurance’s video appraisal feature on their mobile app, have allowed firms to cut costs and increase customer satisfaction. It is logical to conclude more firms will follow suit once a decision has been reached in the USAA case. In the foreseeable future, it is possible that drones and their many varieties could be an ever-growing piece of the insurance industry pie.