As they move from theoretical use cases into the testing phase, insurance companies are witnessing the impact unmanned aircraft systems will have on claims and underwriting processes quickly. Allstate, State Farm, USAA and other insurers foresee drones as a means for roof inspection and scene investigation after catastrophic events, such as hailstorms or wildfires. This will result in expedited claims estimates for customers and time saved on manual inspections of damaged property, industry leaders say.
The industry’s use of small unmanned aircraft systems is not without restrictions, however. Complying with regulations set by the Federal Aviation Administration is proving to be carriers’ biggest challenge. Yet, the drone market is booming. According to the FAA’s latest forecast, there could be as many as 7 million small drones flying in national airspace by 2020. Total sales of drones will also increase from $2.5 million to $7 million in the same period with commercial purchases accounting for $2.7 million of that total.
“Drones are a game-changing technology that we can translate into something usable like an estimate,” said Kristina Tomasetti, director of strategic innovation at USAA. “The image can deliver data directly into the claims system instead of validating or measuring it through a third party. It also allows us to use manual labor on processes that will remain manual by nature.”
Early Testing Results Are In
The drones of choice for insurers are quad-rotors: aircraft with four propellers. USAA began testing with 3DR’s Solo Quadcopter north of Dallas and around Tomasetti’s home in San Antonio before recently adding DJI’s Inspire. The insurer now tests both in residential and rural areas and has been particularly busy during hail season, she says.
“Testing is about location and the sensors (cameras) on the drone. We test areas where we have losses and are able to fly, adhering to FAA rules,” she said. “The question for us when we began was, ‘Do we use our own fleet and pilots?’ We looked internally, but quads are the way to go because they allow us to get closer and get better images.”
Echoing Tomasetti’s sentiment is Erie Insurance’s VP of property and subrogation claims, Gary Sullivan. “Quad-rotors are very safe and reliable,” he says. Erie Insurance began loss control inspections in September and has used both the DJI Phantom 2 and DJI Phantom 3 in its testing. DJI, a Chinese tech company that also manufactures the Ronin, controls 75% of the drone market, according to Sullivan.
Both State Farm and Allstate said it is still too early to fully gauge results from pilot programs. However, Allstate finds using drones to evaluate property damage does offer easier access into restricted areas by authorities or debris.
In addition, State Farm commented, “We see drone technology as an additional tool to complement our claim associates. Following a catastrophe event, damage to infrastructure can make it difficult to access damaged communities. Therefore, it may be days or weeks before our teams are allowed into the community to begin physical inspections.”
While drone data quality is impressive, using the unmanned aircrafts does have its challenges, Sullivan says. Privacy concerns are an issue when dealing with the general public. So, too, are weather and property conditions. Video files pulled from drones have also proven to be too large to process quickly.
“Data storage files are huge,” he said. “We are able to upload images onto our software without a problem. But we find video files take much longer and are working on a way to speed it up.”
At the Mercy of the FAA
As insurers venture more into drones, complying with FAA regulations may be even more obstructing, sources said. In February, the FAA proposed final safety measures for small unmanned aircrafts, less than 55 pounds. The proposal submitted for public comment addresses height restrictions, aircraft registration, marking and operator certifications.
According to the agency, pilots have to be at least 17 years of age to fly and are required to pass FAA knowledge tests every 24 months to retain their license. Flights can also only occur in daylight and in visual line of sight, or non-cloudy days.
Carriers are currently allowed to test drones under Section 333 exemptions. Under the rule, drones must fly below 400 feet from the ground and have a tail number. Pilots are also not permitted to fly within five miles of an airport without airline approval, leaving insurers like Erie at a disadvantage.
“We cannot fly a drone over our home offices because we are too close to the airport,” Sullivan said.
In response, the FAA says insurers have to operate according to the same rules as all Section 333 exemption holders. “Their petitions are considered just like any other applicant’s,” the agency says.
The FAA is expected to finalize the new guidelines next month. The decision will offer more clarification for insurers on how to add to current exemptions and better adhere to FAA guidelines.
Going forward, the bright side for insurance companies is customers are willing to take part in drone surveillance.
“Ultimately, we want to add to our exemption to deploy drones quicker and easier,” said Tomasetti. “If we remove some barriers it would be better for customers.”
