Tag Archives: aerial imaging

5 Ways Drones Are Changing Insurance

According to a recent survey of U.S. consumers, more than 32% of all respondents—and 50% of those aged 18–25—said they prefer to work directly with insurance carriers. We are also experiencing rapid changes in the amount of data that insurers are gathering and analyzing: The number of internet-connected devices and sensors is projected to reach 50 billion by 2020, providing real-time information that insurers can use for better pricing/underwriting. Meanwhile, drones are expected to have a $6.8 billion impact on the insurance industry.

See also: Drones Reducing Accidents on Job  

As a drone enthusiast myself, I’ve been lucky to use my drone to capture aerial imagery—footage I was unable to take a few short years ago. This is but one of the copious amounts of types of data unmanned aerial vehicles (UAVs) can obtain to support the insurance industry. Accordingly, I curated a list of the top five ways drones are affecting the insurance industry.

1. Drones already play an important part in the insurance claims process

Customer experience is paramount, and the ability to shorten the claims timeframe is crucial. Today, one claims adjuster on-site and equipped with a drone can set up an automated flight plan around multiple insured locations; evaluate the properties using sensors; and capture images. According to Cognizant, drone usage is predicted to make claims adjusters’ workflow 40% to 50% more efficient. Drones can improve the speed with which customers receive settlements and give claims managers  a better sense of where and how many staff should be deployed. There is also less risk for claims adjusters, who no longer need to climb ladders or go on roofs to assess damage.

2. More precise risk management and tailored pricing

Drones can be used to collect information about a property before a policy is issued, by capturing data on property features that make it less vulnerable, such as storm shutters. The data can facilitate personalized premiums. After all, insurance is all about measuring risk and accurately pricing it.

3. Better data, better catastrophe models

Aerial imagery taken by drones enhances data for catastrophe model components and provides inputs for analysis. As discussed in this blog post, for catastrophe model developers and users there is mutually beneficial interplay between model development, engineering analysis and exposure and claims data quality. Improving the feedback loop between underwriters, claims adjusters and model validation can substantially increase a cat model’s performance in quantifying risk.

4. Lower losses from fraud

According to the Insurance Information Institute, fraud accounts for about 10% of property and casualty insurance losses and loss adjustment expenses, which translates to about $32 billion each year. In addition, 57% of insurers predict an increase in this type of fraud by policyholders. How can drones help? After an extreme event, it is common for insurance companies to receive numerous claims for damages that existed before the event occurred. By using UAVs prior to an extreme event to capture images of insured properties, companies can protect themselves from such fraudulent claims.

5. Drones and artificial intelligence come together

Artificial intelligence (AI) integrated with drones will allow for more independent functionality. IBM’s AI system, Watson, is able to automatically process aerial imagery, assess hail damage and calculate damage extent. Drones integrated with AI will provide an end-to-end solution that will allow for an expedited claims process, reduction in costs and increase in customer satisfaction.

See also: What Is the Future for Drones?  

An extreme event can devastate a region and affect thousands of lives. For the insurers and people affected, timing is everything. Organizations need to dedicate resources immediately, effectively and efficiently to help get communities and businesses back on their feet.

In this era of rapid technological advancement, drones are one of the many new tools with which life, business and the global economy are being transformed.

9 Technologies That Will Change Insurance

“We’re at maybe 1% of what is possible. Despite the faster change, we’re still moving slow relative to the opportunities we have.”

This compelling statement from Larry Page, CEO and co-founder of Google epitomizes the power and potential of emerging technologies. Yet most insurers have difficult comprehending how fast emerging technologies are being introduced. And the pace is gathering speed, having a profound impact on our lives, our businesses and our industry. Moore’s Law tells us that computing power doubles every 18 – 24 months, but even that seems to be irrelevant compared with the power of emerging technologies, because they are coming faster, and they are more formidable than ever before.

This rapidly accelerating pace comes at a time when the convergence of advancing technologies, increasing customer expectations and access to capital for new technology start-ups are magnifying the extremes, and the impact to the insurance industry is more game-changing than ever before. Never before has technology advancement had as much influence as what we are experiencing now.

Technologies promise breakthroughs that will challenge long-held business assumptions and shift the boundaries between business and industry – creating completely new businesses and industries. SMA is actively tracking nine emerging technologies: 3D printing, the Internet of Things (IoT), drones/aerial imagery, driverless vehicles, wearable devices, “gamification,” artificial intelligence, semantic technologies and biotechnology. We are following them from a perspective inside the industry as well as taking an “outside-the-industry” view. 

Not surprisingly, adoption is being led by the Internet of Things (IoT). The IoT is followed by artificial intelligence (AI), drones/aerial imagery and then gamification. The insurance industry’s rapid adoption is impressive. Five of the nine technologies are projected to arrive at or go well beyond the tipping point within three years. All nine are projected to surpass the tipping point within five years.

Adding to the momentum, individuals and companies that are a part of SMA’s Innovation Ecosystem and represent outside-the-industry perspectives see an even faster rate of adoption and greater potential for the transformation of insurance. This underscores that the insurance industry is on the crest of a massive wave of change.

Over the next five years, these emerging technologies, just like the Internet, smartphones and social media before them, are expected to drive new business models and foster the formation of companies from unexpected combinations of companies and industries — capturing the customer relationship and revenue. The astounding influence of these technologies — over a relatively short period — will begin to delineate a new generation of market leaders within and outside the insurance industry. Who will be the next Facebook, Uber or eBay?

So how should insurers respond to this rapid adoption? Insurers must quickly begin to develop strategies and experiment with and invest in these technologies today. If not, many insurers will be placed at significant risk, because there is typically a minimum two-year lag time between leaders and the mainstream and a minimum four- to five-year lag time between leaders and laggards. And given the pace of adoption of these technologies by insurance customers, the lag time carries more potential for damage than it did in the past. Consider that Apple introduced the iPhone just seven years ago, in June 2007. The result has been massive destruction and transformation that has created new leaders while forcing others into increasing irrelevance.

While it may be difficult to grasp the sheer magnitude of the change coming from the emerging technologies, remember that Larry Page of Google says we are only seeing 1% of the potential. Insurers must aggressively find a way to engage these technologies and uncover the potential, first to stay in the game, and then to win it. To do so, insurers must have modern core systems as a foundation to integrate the use of these technologies.

Consider these questions: How will product liability need to be redefined for driverless vehicles? If individuals or businesses no longer need auto insurance, what is the impact on other products? Multi-policy discounts? Will the driverless car encourage shopping for alternative options? Will it drive commoditization into other products? How will insurers assess the value and risk of a 3D-printed structure, body organs or vehicle parts? How will biotechnology-based agriculture change risk factors? How will drones help underwriting and claims? Can drones also provide resources needed during catastrophes, creating new services and value? Could gamification be a new channel to help drive increased market penetration through engagement and education about life insurance, health, medical, liability, home, umbrella and more?

These are but a few of the implications for insurance. They are inter-related and complex. They stress the significant disruption that is coming, and coming fast, as represented by the five out of nine emerging technologies that will reach the tipping point within three years … and some much sooner. Insurers that have not begun to pilot these technologies are already lagging behind and will struggle to keep up with this accelerated pace of adoption, not just from today’s competitors, but also from tomorrow’s competitors, as well as their customers. That poses a question: Will you remain relevant, or become the next Kodak, Blockbuster Video, Borders or CNN of insurance – the iconic brand that dies?

The coming years hold unparalleled opportunities for innovation and matchless potential for becoming market leaders that leverage emerging technologies to increase customer value, engagement and loyalty to insurers. As Steve Jobs stated, “Everyone here has the sense that right now is one of those moments when we are influencing the future.” The question to you is: Will you influence the future or be a remnant of the past?

This article is adapted from a new research report, Emerging Technologies: Reshaping the Next-Gen Insurer.