In early 2014 the first commercially available drone debuted in the consumer market. From the very beginning demand was phenomenal as both professionals and consumers (prosumers) found creative ways to use this new technology. Some of those early adopters were from the insurance industry, including insurers who saw an opportunity for faster claims processing, increased accuracy, and cost reductions. Insurance company staff might point to another valuable benefit of drone usage: safety.
Before drones were commercially available, claims adjusters used ladders and aerial or boom lifts to access roofs and exteriors. These methods were effective but not without drawbacks: the inherent risk in having personnel on roofs; at least two people are required to operate a lift safely; the need for stable, flat ground; height limitations; and both ladders and lifts require storage and transportation to remote locations. Lifts also have substantial associated costs such as fuel, maintenance, and insurance.
Drones, sometimes referred to as Unmanned Aerial Vehicles, or UAVs, offer an attractive, safer alternative with groundbreaking benefits such as precise GPS coordinates and the ability to reach locations that a lift never could, like under a bridge. In terms of cost control alone, drones clearly come out ahead. The most popular prosumer drones run from $750 to $2,000 and are powered by rechargeable lithium-ion batteries, while prices for an aerial lift start in the five-figure range. Operational costs are also lower: surveying a church steeple in a single 20-minute drone flight is significantly cheaper in person-hours than having two staff on-site to operate an aerial lift for hours, if not days.
Drones bring their own issues, of course. They have physical limitations, such as clear weather and a direct view of the sky for GPS functionality. Legal issues are still a big question mark: there are currently no federal laws or statutes in the US that specifically apply to drone operation by the general public, although the FAA has sometimes interpreted voluntary standards set in the 1980s for remote-controlled model aircraft to drones.
As fast as technology is advancing, there are still jobs that a drone simply cannot do. Drones cannot operate in restricted airspace: some models do not permit the drone to leave the ground if they are in a banned area. If an adjuster has to physically examine a roof, there is no substitute for a lift. In general, though, insurers like State Farm, USAA, and AIG are experimenting with prosumer drones because they can make assessment faster, more accurate, and more cost-efficient while keeping employees out of dangerous conditions. These are major benefits for today’s forward-thinking insurers, and we expect that use and acceptance of drones will continue to increase as regulation permits. A timelier and more accurate claims process, improved customer experience, and safer conditions for insurance staff will continue to drive investment as interest in drones continues to rise.
This blog entry has been republished with permission.
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