Drones are fast becoming the staple of fast and sustained industrial inspections. The insurance industry has been the earliest adopters of drones in their inspections. Drones in insurance industry have grown to be a core business enabler across the insurance value chain.
A recent Goldman Sachs report showed that the drone industry would reach $100 billion by 2020, $13 billion of which would be from commercial businesses. Furthermore, another Federal Aviation Administration (FAA) projection from 2018-2038 showed a clear 17% share of insurance companies in commercial drones.
Even when the writing’s on the wall, it’s difficult to envision a traditional and analytical industry like insurance to be a heavyweight in drone usage. To understand this better, let’s take a step back and understand the insurance value chain.
Bottlenecks of the insurance value chain
Insurance can be simplified, in terms of process, in pre-event and post-event. ‘Event’ here is the initiation of a claim which could follow a loss at the insured party’s end.
Pre-event evaluation of an insurance profile requires thorough risk identification and measurement. This is also a regular protocol across claim extensions or revaluations. An authority within the company like the underwriter evaluates this risk profile to estimate or project a cost for the claim. This is further processed to become a product or service for the insured party.
a. Delay in inspections of industrial assets
Each stage of the insurance value chain has multiple checks and balances which require constant evaluation of the risk factors involved, namely structural, environmental, causal or incidental. This evaluation is done by on-field inspection officers.
However, the inspection officers take many days to properly evaluate the integrity of industrial or other assets. Further data processing takes up more days to the point where the final claim structure is developed.
The most obvious bottleneck here is the delay. Many days or weeks are spent to properly assess the risk factors, of supposing many acres of a solar farm. This delay is a clear and direct cost to both parties. The actual man-hours spent doing the inspections add on the total cost.
b. Errors and problems in risk profiling for insurance companies
This is still the operational expenses and can be managed. The major concern with these inspections is the inherent errors or oversights involved. It is critical that the potential recovery associated with the claim be calculated accurately. Any errors here can result in claim leakages (the lost value within a claim due to process inefficiencies). This results in stunted claim recovery.
Within the post-event evaluation, the inspection officers’ work is more detailed and impactful. They must decipher the efficacy of the loss in terms of the agreed clauses for the claim. The bottlenecks of delays and errors again lead to devaluation for both parties, the insurer and the insured.
Drones in insurance industry: A perfect fit
The insurance industry has been one of the earliest adopters of drones for commercial usage. They were even the first to acquire FAA permission for aerial data collection using Unmanned Aerial Vehicles (UAVs) back in 2015. The insurance industry has been the pioneer in a way for commercial drones.
What is about drones that make them so important? Drones have saved more than $6.8 billion for the insurance industry every year, according to PricewaterhouseCoopers study. This is an impact right off the bat by using drones.
Let’s tackle the benefits one-by-one:
1. Drones boost the pre and post-event evaluation time
Drones cut down the total inspection time for multiple acres of assets to mere hours rather than days. ideaForge’s robust and military-ready drones have the added advantage of flying faster, longer and better than the rest. This means that they can cover greater distances with better control and, yet, total automation if required.
The drones are equipped with high-end image or data capturing payloads like HD cameras with multi-zoom capabilities, infrared or thermal imaging, etc. The drones designed and perfected by ideaForge can have dual payloads for multi-faceted analytics in the same flight. They can cover even hard-to-reach areas or heights for a deep and quick assessment of all sections of the asset.
2. High accuracy and credibility with drones
Pre or post-event inspections associated with risk assessments are integral to the underwriter’s risk profiling. Drones streamline the information gathered into a single and highly-efficient flow. No longer do the inspection officers manually collect data and then painstakingly collate each part for a cohesive picture. The drones have a 360-degree viewing angle and can be dynamically controlled right from the Ground Control Station. The officer can put in waypoints, or the location points for the drone to move along, for an automated (auto-pilot) flight. The officer can also add waypoints dynamically for immediate or deeper evaluation of an area.
All HD visuals and analytics are instantly encrypted and fed-back to the system for immediate processing. The officers or underwriters can view detailed 3D thermal or elevation maps within minutes. They can utilize infrared or LiDAR tech, as a payload with the drone, to perfectly analyse the surfaces of industrial assets like boilers or wind turbines. This is even in-line with equipment breakdown insurance claim evaluations.
Such fine information adds to the context and accuracy of the underwritten claim. Furthermore, all the information is documented and tagged with an absolutely precise time and location markers.
3. Assessing environmental or post-disaster scenarios quickly
ideaForge’s drones, with their Vertical Take-off and Landing (VTOL) and easy to handle dimensions, are totally man-portable. They can be launched from even remote areas with ease. A single inspection officer can examine dozens of claims within days, with zero errors or oversight.
This is especially helpful for environmental monitoring of surrounding areas of the post-disaster assessment for faster and accurate damage calculations or projections. The speed and accuracy of the valuations, enabled by the drones, help sustain the satisfaction of the insured parties.
4. Total accountability during adjudication
Drones, as mentioned before, document and process information live. This helps in cases of adjudication or dispute. Crystal clear proof of all, time-and-location-tagged, information leads to faster settlements and resolutions. It also helps in streamlining subrogation where the insurance claim is raised against a third-party wrongdoer.
5. Drones are a great tool to cut down insurance fraud
Fraud has been a consistent and major concern for insurance companies. With time, insurance fraud detection has improved, however, due to a high claim turnover ratio (new claims to the claim closed in a month), due diligence is often overlooked.
The use of drones in insurance industry can help eliminate $32 billion losses due to early detection of fraud. It is important to respond quickly to respond to a claim reported (first notice of loss). This means that rather than days spent by an insurance officer, a drone would finish the first inspection within hours. This drone inspection, with accurate actionable insights, helps spot a fraudulent claim in real-time.
Drones have become a mainstay of global inspections proficiencies across industries. Drones in insurance industry will continue to be a beacon which brings us closer to a UAV-led automated and streamlined future.