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Drones + Gig Economy = Win for Insurance

It is projected that, by the year 2020, there will be 7 million drones in the U.S. alone. Most consumers buy drones for recreational use, but businesses have begun to use drones, as well. Drones are used by photographers to obtain better camera angles, by farmers for crop surveillance and by media outlets for coverage of newsworthy events. Amazon has even launched Amazon Prime Air, which uses drones to get shipments to customers in 30 minutes or less.

A similarly important shift is the rise of the gig economy, in which 55 million Americans offer their services and assets — homes, cars, labor — to earn supplemental or full-time income. Recently, these two phenomena have intersected. Drone use, in combination with the gig economy, will significantly improve various aspects of the insurance supply chain.

See also: Gig Economy: Newest Tool for Insurance  

Insurance and Drones

Drones can help the insurance industry by improving data quality, providing unprecedented views, ensuring safety and increasing the speed at which claims can be resolved. These new realities are incredibly important for the insurance sector.

By flying drones over damaged houses or other properties, operators can acquire high-quality video footage that accelerates and improves claims resolution processes. Drone footage can immediately be sent back to carriers for analysis.

Drones can significantly reduce the risks associated with field inspections. By leveraging drones, insurance adjusters can avoid climbing ladders and even setting foot in damaged buildings. Operators can remain safely on the ground and fly their drones over damaged property or disaster areas.

Insurance and the Gig Economy

Insurance carriers are already able to tap into the power of gig economy platforms to complete any number of tasks. At WeGoLook, for instance, we connect a network of 30,000 gig workers with insurance carriers across North America. At the swipe of a smartphone, a Looker can be dispatched to conduct a damage assessment, asset verification, scene inspection, document retrieval or any number of other tasks or processes. The gig economy not only offers insurers the ability to fulfill these needs affordably and at scale, but it can also help to accommodate workload surges brought on when natural disasters strike.

Bringing It All Together

Gig economy platforms are now beginning to offer drone services. These services combine the power of drone technology with the convenience and accessibility of gig solutions, making drones more accessible than ever for insurers.

Gig workers who own drones can be dispatched by insurers to conduct a variety of tasks. An insurer could hire its own drone workforce, but this would be time-consuming and expensive. Gig platforms allow insurers to completely outsource drone operation and training that would otherwise require significant upfront investment. Further, insurers don’t need to worry about how to train operators, conduct maintenance or insure against unintended damages.

The gig economy’s on-demand model can be tapped at any moment. This efficiency, combined with the use of drones, is vastly improving the time to process insurance claims.

WeGoLook’s COO, Kenneth Knoll, provides an example of this type of efficiency: “We recently received an assignment that involved capturing aerial imagery of a commercial location where an injury occurred and details were needed as part of the case. As opposed to photos from the ground, the aerial imagery was much more effective to illustrate the exact conditions of the scene in question. Plus, our drone footage was delivered to the carrier within 24 hours, thanks to the efficiency of our on-demand workforce.”

Given all the benefits of drone technology and the increasing availability of drone services via gig economy platforms, there’s a good chance that a drone will be involved in your next insurance claim. Insurance professionals and customers can look forward to better data, faster resolution times and safer inspections.

See also: What Gig Economy Means for Insurers  

Final Thoughts

Roughly 34% of the U.S. workforce currently participates in the gig economy in some way. When you combine these numbers with 7 million drones that will be owned by Americans by 2020, this creates the potential for a vast network of drone pilots working in a freelance capacity.

These freelance drone pilots can be helpful for insurance companies, insurance policyholders and gig economy companies that crowdsource and connect them with jobs. There’s no doubt that drones, in combination with the gig economy, will bring significant benefits for the insurance industry.

3 Technology Trends Worth Watching

At a time when many insurers believe that 20% of their business could be soon lost to insurtech startups and when roughly one third of insurance industry CIOs said that, if given an extra $5 million to spend, they would spend it on big data or increased data collection, understanding technology trends is critical to gaining an edge.

So, let’s look at three of the emerging technologies affecting the insurance sector.

1. Sensors and other data-tracking technologies

In the past, insurance companies and actuaries based their pricing on aggregated data from large numbers of customers. Today, innovations in internet-connected devices such as wearables, auto devices and smart homes are giving insurance companies meaningful data that is specific to individual policyholders.

For example, Progressive Insurance created Snapshot, a device a policyholder can install in his or her car that allows Progressive to monitor certain data about the customer’s driving habits and to adjust pricing accordingly. Progressive claims to have distributed $600 million in discounts to its policyholders, largely because of data from Snapshot.

See also: 10 Trends at Heart of Insurtech Revolution  

Snapshot is just one example of how sensors and data-tracking technology can generate savings for policyholders while, at the same time, making insurers more efficient. As this technology continues to gain adoption, many more sensors will be available to monitor policyholder data on health, autos, homes and more.

2. Drones

Drone technology is a rapidly growing niche in the insurance industry, with some predicting it will reach a yearly value of $6.8 billion in the coming years. This growing interest in drone technology was a driving force behind a recent panel discussion on drones at the Contractor Connection conference in St. Louis. WeGoLook’s COO, Kenneth Knoll, participated in this panel, which was attended by more than 3,000 industry professionals.

Knoll noted that drone technology applies to a wide range of insurance services — roof inspections, underwriting, disaster relief, crop inspections, and much more. Consider an order recently received by WeGoLook requesting a scene inspection at a commercial location where an injury occurred. As compared with photos taken from the ground, aerial imagery captured by one of WeGoLook’s licensed drone operators offered the insurer client a much more effective representation of the scene in question.

3. Paperless solutions

Evolving technology also makes it possible for insurers to onboard new clients, handle claims and send notifications in a completely paperless manner. The increased digitization of insurance solutions has the potential to dramatically improve the speed and efficiency with which insurance companies operate. For example, Lemonade, an insurtech company, allows clients to sign up for policies and file claims in less than three minutes, using only a mobile device.

Mobile is the new paper as millennials have an extremely high percentage of smartphone use (97%). Carriers that can
best cater to paperless, mobile solutions will gain a strong competitive advantage.

See also: The Story Behind the Lemonade Hype  

Final Thoughts

Some have argued that we are currently experiencing a fourth industrial revolution powered, in part, by the developments noted above. Sensors, drones and paperless solutions are just a few of the technologies driving this revolution.

Carriers must make these types of innovations a priority because they are fundamentally changing the expectations of clients. It’s time for all insurance professionals to acknowledge and embrace this digital transformation.

3 Ways to Leverage Digital Innovation

Technological innovation has the potential to change any industry for the better, and major technological developments in the last decade or so are creating exciting opportunities in insurance.

Here are some of the top ways that insurance can leverage digital technological innovation.

1. Advanced Data Collection

From wearable technology, to devices you can put in your car to monitor your driving habits, all of these innovations can provide insurance companies with highly useful data for their policyholders. Smartwatches alone can provide a large amount of beneficial data. For example, the Apple watch can track all of the following; heart rate, activity levels, steps taken, calories burned, movement, among others.

Technological breakthroughs are making it easier for insurance companies to gather critical data. Being able to access large amounts of data can help insurers to create better policies, identify their lowest-risk policyholders and obtain alerts when policyholders are at risk for certain types of loss.

See also: The Key to Digital Innovation Success  

2. New Types of Insurance

All of the advances in technology have led to many companies becoming increasingly reliant on their tech infrastructures. Also, increased dependence on technology has created a heightened need for data to be protected. Massive losses can be incurred by companies that have their sensitive data breached. The result is that “cyber insurance” is becoming increasingly popular.

Almost 10% of companies now have cyber insurance. This number is likely to increase as more insurers begin to offer this type of coverage, and more companies realize that they need it. In fact, within a few years, cyber insurance could be as common as property insurance or liability insurance for businesses.

3. Increased Personalization

Many insurtech companies are now making it possible for customers to engage with their insurance companies through various types of apps. These apps allow policyholders to set up profiles and indicate their preferences for service offerings. Customers can even choose to connect with their insurance companies on various social media outlets if they want to. And, because 47% of millennials report being influenced by social media when it comes to making purchases, this is a good thing.

Personalization can be beneficial when it comes to improving customer experience, and helping customers to enjoy their interactions with their insurance company. In this sense, mobile innovations are making personalization easier by connecting policyholders with insurers directly on their smartphones.

Final Thoughts

Technological innovation in insurtech, wearable devices, data, apps, mobile devices, computers and many more areas all have a strong impact on the insurance industry. The time from the start of the new millennium until the present day has brought many of these new technological innovations. Some insurance companies may hesitate to take advantage of new technology because of a fear of change.

However, there are incredible opportunities out there. Advanced data collection, new types of insurance and increased personalization are only a few of the ways that insurers can leverage digital technology innovation to become more profitable.

See also: ‘Digital’ Needs a Personal Touch  

As technology continues to advance, even more opportunities will become available.

The Failures and Successes of Insurtech

In the past 10 to 15 years, insurance technology, or insurtech, has been taking the world by storm. In fact, in 2016, VC investment in insurtech exceeded $1 billion.

The rise of insurtech is largely due to the ever-increasing use of mobile devices and the need for quick, simple and safe insurance solutions that mobile users can use regularly.

However, even though the insurtech industry has been progressing very swiftly, not every major insurtech startup is a roaring success. Here is a look at some of the lessons from insurtech’s successes and failures.

Successes

  • Everquote – Everquote is an insurtech company that helps people compare quotes for auto insurance premiums. The company was founded in 2010, and generated over $100 million in revenue in 2015.
  • Coverfox – Coverfox is a Mumbai-based insurance brokerage that enables people to easily buy insurance online. This company was founded in 2013. In 2015, it received $12 million in Series B funding. Its website currently averages 280k hits per month.
  • The Zebra – The Zebra is also an auto insurance comparison platform, like Everquote. This company was founded in 2012 in Texas. The Zebra has received over $23 million in investing, including an investment from Mark Cuban.

These three companies all fill significant needs in the insurance market. Everquote and The Zebra both allow customers to shop for the lowest auto insurance rates, and CoverFox allows people to find insurance coverage incredibly quickly for a broad range of risks.

See also: 5 Insurtech Trends for the Rest of 2017  

Also, all of these companies were founded in the last seven years, during the period when the insurtech market really started to heat up. So, the success of these companies is the result of a combination of good timing, the usefulness of service, and also, being appealing to vast numbers of people.

The Less Fortunate

Most insurtech companies do not enjoy the level of success obtained by Everquote, CoverFox, and The Zebra. In fact, like most startups, the majority in the insurtech field fail. Buy why? And what lessons can we learn?

Here are some of the top reasons for failure cited by insurtech founders whose companies failed.

  • Timing5 insurtech founders said that one of the biggest reasons why their businesses failed was because of bad timing. This means either being too early or too late to market, and not meeting a consumer need that is current and strong.
  • Not Getting Funding Early Enough – Delaying funding was another reason cited as a key reason why insurtech companies failed. This makes logical sense, as funding brings company resources and stability to a whole new level. It also earns insurtech startups some degree of prestige that’s hard to obtain without it.
  • Lack of Specialists on Staff – Often, startups do not realize the importance of having experts on staff who can take care of the complicated technical aspects of the business. Startups may be founded on a great idea, but that doesn’t mean that the people founding them have all of the required skills to make the company successful. Because of this, it’s no surprise that lack of specialists on staff was cited as another key reason why Insurtech companies fail.

See also: 10 Trends at Heart of Insurtech Revolution  

Final Thoughts

The insurtech industry is projected to grow steadily in the next few years. In fact, a single hedge VC firm, Aviva Ventures, plans to invest $100 million by itself in insurtech by 2020. That is just one firm!

However, despite the strong predicted growth of the market, this does not mean that every insurtech startup will succeed. In fact, many will likely fail.

The companies who can emulate this industry’s successes and avoid the causes of failure mentioned above may have a better chance of achieving success.

Opportunities in the Sharing Economy

Companies such as Uber, WeGoLook, and Airbnb are taking the sharing economy to the next level by allowing people to earn money from assets they already own, and the spare time that they have. In fact, Airbnb, the short-term property rental company, saw sales of $900 million in 2015. Airbnb was also valued at an impressive $24 billion in the same year. For a company that owns zero properties, that’s impressive!

All of these changes are bringing a lot of questions for insurance. This is primarily due to the short-term nature of the sharing economy.

See also: What to Learn From Sharing Economy  

The Sharing Economy and Insurance

The sharing economy is clearly fulfilling a number of consumer demands. That said, it is also exposing situations in which new liabilities need coverage. Many of these new risks are not covered by standard insurance policies.

For example, people who rent out their homes for Airbnb purposes generally do not have the associated risks covered under a typical homeowner’s policy.

Airbnb does offer insurance coverage up to $1 million. While this is a good start, the coverage may not be enough for very expensive homes, in situations such as a fire occurring in an urban area and spreading to other properties, or even where an unfortunate medical emergency or even death occurs.

There are also other issues with Airbnb insurance, including the fact that it does not provide coverage if a guest shows up early or stays late. This can potentially be disastrous.

People who use other assets such as their cars for business purposes may also find that their standard policies do not provide coverage. Ride-sharing companies such as Uber do provide some coverage for their drivers. However, this coverage may not be enough in many cases for drivers to have all of their claims fully covered.

Opportunity for Insurers

Because the sharing economy is growing rapidly and consumers are embracing it, there is a major opportunity for insurance companies. The millions of people who share assets in the sharing economy need adequate insurance solutions to help them cover their risks.

Insurance companies can capitalize on this need by creating insurance products for entrepreneurs who provide on-the-go and on-demand services in the sharing economy.

And many already have!

One insurance company that is moving full steam ahead in the sharing economy insurance market is Slice. Slice provides “pay per use” insurance policies that cater to sharing economy workers. In 2016, Slice received $3.9 million of funding as a reward for this innovative business model.

Companies such as Lemonade are taking it one step further and even offering insurance as a shared asset through a peer-to-peer model. Lemonade has its users pay a flat service fee and payouts for claims come from premiums paid by networks of friends.

This prevents Lemonade from having incentives to reduce the amount of payouts made. It is a revolutionary approach to insurance!

See also: Sharing Economy: The Concept of Trust  

Final Thoughts

Considering that the sharing economy is expected to grow to $355 billion by 2025, it is safe to say that the sharing trend is here to stay. This means that it is wise for insurers to get on board and to start accommodating it sooner rather than later.

Slice and Lemonade are two examples of companies that are already attempting to gain strong market share in the sharing economy. However, even though these companies are gaining traction, there is still likely to be substantial opportunity for any insurer that can help to provide insurance for the sharing economy.

It appears that the time has come for the insurance industry to adapt and change to accommodate the consumer demand for sharing economy-centric policies.