To some, they’re toys; to others, weapons. We’re still figuring out how drones fit into our lives as tools for observing, transporting, communicating… and who knows what else. But as they increasingly enter mainstream business practices, we in the insurance world see an exciting drone development: the insurance industry actually appears to be leading the charge of drone adoption.
How Does the Insurance Industry Use Drones?
Inspecting buildings and property for insurance purposes takes a lot of resources. Claims adjusters are experts who must be able to spot patterns and precursors to damage—not just damage itself. But being an insurance inspector is quite risky: inspectors must often climb ladders, crawl out onto ledges and balance in tricky spots, and sometimes they even need to enter potentially dangerous spaces (like buildings that have burned down) to inspect and photograph damage. Being on a ladder or roof is one of the most hazardous tasks in the U.S, according to the Centers for Disease Control and Prevention (CDC), which also notes that workers’ compensation and medical costs from fall injuries (from all types of work, not just insurance inspectors) run about $70 billion annually in the U.S.
All the walking, climbing, and maneuvering that inspectors do take a lot of time. A residential house takes between one and two hours to inspect, a commercial building takes three hours, and a building with 20 or more stories can take up to six hours to thoroughly document, according to CB Insights.
But drones can change all that. The unpiloted aerial vehicles can easily zip and dip through structurally unsound buildings, they can zoom up and over rooftops, and they can even achieve views and angles that would be impossible for a person to duplicate, all in about a tenth of the time it would take a person, reports CB Insights.
Drones aren’t just helping insurers save time and resources during inspections, they’re helping them keep customers, too. The most important factor determining whether a customer sticks with his or her current homeowner’s insurance company or switches to a new one isn’t price—it’s how long a claims process takes, according to a JD Power study. What’s more, if customers can wrap up their claims more quickly, they’re more likely to remain with an insurer.
Drones will also allow insurers to gather, store, and catalogue huge amounts of data which insurers could use for risk modeling and loss estimation, says CB Insights. They add that drones could automate tedious (and labor-intensive) tasks like counting missing shingles on a roof or determining whether a building façade might crumble.
Drones can’t replace insurance adjusters and building inspectors (yet). As CB Insights notes, inspecting a building is intricate, difficult work that requires expert skills and years of training. Drones are tools that can speed up and improve the work of inspectors, saving inspectors time, keeping them safer, and offering better and more detailed property views by taking pictures and videos that experienced inspectors can pore over later.
Where Does the FAA Stand Now Regarding Drone Use?
It used to be that obtaining permission for drone use involved mountains of paperwork, more than six months’ wait, and only a person with a pilot’s license could operate them (500 feet away from the public, to boot). Still, 70% of the Fortune 500 Property Insurers applied to the FAA for permission to use drones, CB Insights reported.
But now, all that’s changed. In late August, the FAA’s final rule for small drones (those weighing fewer than 55 pounds) went into effect, reported the National Law Review. With the new rules, small drone operators no longer need a pilot’s license and FAA certification is no longer required.
Drones in the Media
Other industries have been experimenting with small drones, too. Drones have become a useful tool for news organizations to measure and report devastation after natural disasters. Drones reported the recent historic flooding in Louisiana quickly and easily, offering aerial views of the devastation. In this video from Time, drones show submerged cars and trucks, highways that cannot be traveled, as well as spots where the roads are clear of flood waters.
We expect to see more news coverage via drones now that the FAA has changed their regulations. And this could provide a direct safety benefit — and a potential indirect insurance benefit — if visual warnings of dangerous weather events prevent risky behavior, like driving into rising water.
Predictions: The Future of Drones and the Insurance Industry
We haven’t heard reports of widespread drone use in the auto insurance industry yet, but we see many potential uses for them on the horizon.
Perhaps drones will someday patrol highways and side streets, or even busy intersections, their recordings acting as an unbiased third party in the event of car insurance company disputes over fault. Or, imagine your car insurance company sending a drone the minute you call them after a crash — the drone could get to you to document and create a visual report of the scene, including vehicle and property damage.
Because drones make inspections such quick work, we might soon see preemptive inspections before major weather events like hurricanes, predicts CB Insights. These could certainly become part of auto insurance companies’ repertoire, too. What if your car insurance company could easily scan your home to check for potential hazards and dangers that wouldn’t otherwise be apparent (we’re thinking evidence of neighbors who drive erratically, or buildings and trees that look like they could easily fall in a bad storm, causing damage to nearby cars)? Talk about a game-changer.
Like other insurance companies, drones will usher in an era of increased data and information for auto insurance companies, too. Drones could make spot-checking customers very easy, allowing auto insurers to, say, verify a car is actually garaged where the customer claims, or checking whether or not customers really use their vehicles how they say they do (Does a person really use their car for commuting? Do they drive 10,000 miles per year or 50,000?).
Neil Richardson, The Zebra’s insurance expert and licensed agent believes drones could substantially cut down the amount of time auto insurance companies take to close a claim, just as we’ve seen with other types of insurance (like homeowners’), all of which could mean big benefits to customers (faster settlement times!) and car insurance companies alike (retaining customers!).
With the FAA changes now taking effect, there’s no doubt we’ll see increased drone use across industries — we’re looking forward to innovative uses of the technology.