Tag Archives: UAS

Transformation of Roof Claim Processing

The property and casualty insurance industry is on the verge of a transformation. New sources of data are creating possibilities that were previously unthinkable and are changing ingrained business processes, but they are also overwhelming companies with data. One significant source of this coming inundation will be unmanned aerial vehicles and systems (UAVs and UASs, more commonly referred to as drones).

Soon, insurance companies will send drones to inspect roofs to determine P&C claims. Gone will be the days of adjusters risking personal safety while climbing and walking roofs to gather data and assess damage.

See also: Data and Analytics in P&C Insurance  

Much attention has been paid to the new methods of data collection and acquisition. Less attention has been paid to how industry will make efficient and economic use of the new data. The advent of new collection technologies necessitates the development of new data processing methods and processes. Merely adopting new methods for collecting visual data will not lead to significantly increased efficiencies or improved bottom lines. Data handling and business processing improvements must be coupled with new collection technologies.

The Constraints: Business, Technology and Regulations

The industry has been understandably cautious in adopting new technologies that will upset decades of established practice. There are numerous sources for this reluctance, the most important of which include:

  • Scale: With the drone industry in its infancy, insurance providers have expressed concern that few (if any) drone operators could meet demand within specific markets, much less across large geographic areas. Demand for inspections could potentially far outpace the supply of drones and drone operators and could require some firms to contract with multiple operators, thereby adding unwanted layers of complexity to operations.
  • Lack of confidence in the underlying technologies: There is also considerable concern that drone technologies have not yet matured sufficiently for widespread adoption. As an example, only recently has satellite imagery begun to be used more extensively. Adopting this technology so early in its development could expose companies to unpredictable downsides.
  • Lack of turnkey solutions: Drone operators have limited or no ability to provide analytics for the image data acquired. Insurance companies either need to develop their own image analytics technology or engage yet another third party to extract meaningful information from the data.
  • New technology supplanting drones: Some companies are concerned that tying themselves to drone technology providers will set them on a path-dependent course that may prevent them from adopting and profiting from unexpected developments of new technology.
  • Out with the new, keep the old: In many cases, the objection to adopting drones is that the old ways work. Insurance companies have weathered numerous technology changes through the years and are not eager to jettison tried-and-true processes and relationships.
  • Regulations: Another major concern has been the highly uncertain regulatory environment. The Federal Aviation Administration’s initial approach was highly restrictive, requiring pilot licenses for operators and effectively shutting the door to potential market entrants. The new round of regulations, specifically Rule 333 and Part 107, will reverse the overly restrictive pilot license rule and allow competitors to enter the market and drive down prices.

Most of these issues are temporary. The regulatory environment is maturing and stabilizing to allow the growth of a new industry. Over a relatively short period, the market will sort out issues related to scale and availability, maturity of drone technology and whether a newer, superior technology could quickly supplant drones. The market pressures to adopt new technology will make it increasingly untenable to resist innovation.

The issues that will continue to challenge the insurance industry are those related to analytics and business process integration, regardless of the regulatory environment, scale or specific data acquisition technology.

The How: AI, Machine Learning and Business Platforms

Drones are only the beginning of the story. They are merely the tool for collecting visual data, albeit with greater speed, safety, quality and depth than previously available. For an industry to make profitable use of this new source of data, however, visual data must be converted into meaningful information and must integrate seamlessly with all related business processes. Information must be extracted more efficiently from the data sources. Manually performing tasks such as damage detection will no longer be economically feasible given the volume of data and speed at which it will become available.

Companies that harness technologies such as artificial intelligence (AI) and machine learning will significantly improve operations and establish clear advantages. Powerful algorithms will automatically detect damage sustained by a structure (for example, hail damage on a roof) as recorded by drones. These algorithms will be faster and more accurate than any human adjuster, able to perform in mere minutes (or less) what requires hours for humans to do, and the algorithms will be self-training and self-improving.

However, data analysis still needs to be integrated with business processes such as settlement. A platform approach that combines data analytics with business processes, making the information instantly available to stakeholders, will be the most likely method of solving the problem. A fully integrated business platform would store, analyze and report data. It would eliminate reliance on multiple software applications and systems, bringing the full scope of business processes into a single, seamless package. In the case of roof damage claims, the platform approach would integrate detection of structural damage and determination of claim value, and it would issue a report and settlement payment for the homeowner, all with minimal human intervention and within minutes of receiving the visual data. Integrating advanced data analytics and business processes will allow companies access to real-time data and improve decision making with predictive analytics.

See also: 2 Key Tools for Innovation in P&C  

Platforms will also provide the infrastructure to connect insurance companies to drone operators, as well as policyholders. Platforms will provide a market exchange or job board for drone operators for hire across numerous markets, complete with their credentials and technical capacity. Insurance companies will be able to directly interact with their customers through platform technology.

The Why: Increased Competitiveness, Improved Customer Relations and the Bottom Line

The incentives to adopt new technologies are clear. Drones can acquire data more safely, faster, at lower cost and with higher quality than satellites or an army of adjusters. However, the industry will realize greater benefits from focusing on the analytics of the new data, rather than the specific method of collection and delivery of that data. Advanced analytics will drastically reduce the time to settle claims and will standardize the claims settlement process.

Those quick to adopt the new technologies will gain early competitive advantages and efficiencies relative to their peers. Combining analytics and a computing platform approach that harnesses AI and machine learning will simplify business processes—replacing inefficient, disaggregated tools, software applications and systems—and improve decision making. Those that make this leap earlier than their peers will have the clear advantage.

Faster, more accurate and more reliable claims settlement will lead to better business planning and risk management. Powerful computing platforms will allow insurance companies to employ predictive analytics that accurately and quickly determine business risks and provide tools for mitigating those risks.

Improving the claims settlement process will yield improved customer relations. Home repairs, especially significant ones like roof replacement, are a major source of anxiety for homeowners. Reducing the time to completion of repairs through increased processing speed and standardized claims estimates will increase customer satisfaction and loyalty.

What Is the Future for Drones?

In 2013, Amazon CEO Jeff Bezos announced to the world that the online retailer would begin to develop a “drone-to-door” delivery service for its loyal customers. Dubbed Amazon Prime Air, the system would deliver packages directly to your doorstep in just 30 minutes after an order is placed, setting a new and higher bar for “fast delivery.”

However, after a variety of issues and concerns were addressed by increasing regulations added by the Federal Aviation Administration (FAA), it  appeared that Bezos’ announcement would never get off the ground. But after two years of waiting for the FAA, Amazon will finally get to test these drones on U.S. soil — or, should I say U.S. air? — bringing customers one step closer to having their Tide detergent refilled by a delivery drone.

Despite the U.S. government dragging behind on approvals, for retail and civilian use, sales for drones aren’t expected to slow any time soon. Companies like Teal Group, an aerospace research firm, estimates that sales of both military and civilian drones will total more than $89 billion by 2023.

Other big companies, such as State Farm and AIG, are also getting into the drone business. In fact, State Farm is the first insurance company in the U.S. to receive regulatory approval to test drones for commercial use. With drones popping up in so many different industries, it makes me wonder, what impact will drones have on companies’ customer experience — good and bad?

The Good

State Farm plans on changing the insurance industry for the better, using drones to aid in natural disaster relief. For instance, instead of State Farm spending the money (and time) to ship hundreds of claims adjusters out to natural disaster sites to assess damages, the company will send only a handful of agents equipped with a drone partner to more efficiently survey damaged property.

Jason Wolf, a property defense attorney and shareholder at the Florida-based firm, Koch Parafinczuck & Wolf, stated in an interview to ClaimsJournal.com: “I envision a time when, after a catastrophe, an adjuster pulls up to a neighborhood and opens the trunk of his car and presses a few buttons on his tablet device, and the drone does an immediate survey of everything and streams it all right to his tablet device, and he knows exactly where to go first and what’s most significant within minutes. Costing very little money, the insurance company has a sense of everything that needs to be done in a very short amount of time.”

Imagine all the headaches this could mitigate for customers and employees after the chaos caused by unfortunate losses created by natural disasters.

It’s interesting, too, how this type of surveying will require additional training, but training we might be familiar with. Much like a police officer who trains alongside his dog in a K-9 unit, insurance adjusters will train alongside their partner – only, in this industry, it would be a drone.

While there is debate in the insurance world about how drones will operate, one thing is for sure – they will be operated and used to speed up services and save on cost, making customers’ lives a little easier. As such, claims assessment aided by a drone will yield quick turnarounds and an even quicker payout to the insured.

Additionally, insurance companies will start offering drone insurance to owners of unmanned aircraft systems (UAS). RiskandInsurance.com noted that the general types of coverage that will be required for the use of UAS and ancillary business activities will include liability, personal injury, invasion of privacy, property and workers’ compensation. The publication also mentioned that, given the conservative nature of the insurance industry, carriers could place stricter guidelines on drone coverage than the FAA does.

Once regulated and insured, drones will be sent out into the community to collect data. For example, what if someone’s home flooded? Well, insurance companies could send their drone to the flooded house and survey the area for all damages, speeding up the process for families affected.

There is also the use of drones for the collection of data by third parties. Imagine that Ford is looking to target advertisements for a new truck to areas where the road conditions would demand the use of four-wheel drive. Ford hires an agency to send out drones to specific cities where it is looking to advertise.

This drone will collect data on road conditions and take images of cars on the road to make sure a majority of drivers are in trucks, and will then report back on economic conditions. Ford doesn’t want to be advertising where citizens can’t or won’t pay for the product.

In a world becoming more drone-centric, these types of background checks and data collections via UAS will become increasingly more frequent.

The Bad

The government review process for a drone is 120 days, but, by the end of the process, Amazon says the technology of the drone submitted for regulation is outdated. Therefore, Amazon must update its filing and submit to the FAA for regulation, starting the 120-day review process all over again.

The other concern of the FAA is air traffic. Coming down with a few regulations on drone flight, the FAA is requiring that drone controllers have sight of the drone at all times and that they must operate under 400 feet.

Exelis, a global aerospace, defense, information and services company, was featured in an article on Engadget recently, discussing its development of an air traffic control system for drones. Nearly ready for testing at the FAA approved drone-testing sites, the low-altitude monitoring system would keep tabs on compact aircrafts flying at or under the mandated 400 feet.

It’ll be interesting to see how industry giants, such as Amazon, overcome these obstacles to create a non-invasive customer experience with drone technology.

Once regulated, the next issue is invasion of civilian privacy. Private and civil liberties advocates have raised doubts about the legitimacy of facial recognition cameras, thermal imaging cameras, open Wi-Fi sniffers, license plate scanners and other sensors commonly used by drones in the civilian sphere.

Civilian uses of drones for hobby are already causing issues, most notably at the White House, but across the country, as well. The LA Times reported last June that while LA Kings hockey fans were celebrating their Stanley Cup victory, a group noticed a drone flying over their heads filming the scene. Angry at the invasion of privacy, the crowd knocked the drone out of the sky using a T-shirt and then smashed it to bits with a skateboard.

In Los Angeles, flying a drone in public is not illegal, but LAPD Cmdr. Andrew Smith commented that, “It was kind of an eye-opener for us, that this something we really need to pay attention to.” While the Kings fans reactions may seem a little over the top, the general population seems to feel the same way when they see a drone overhead.

With no official laws on the books regarding the use of domestic drones, the right to privacy becomes a large topic of concern for many citizens. The American Civil Liberties Union states on its website, “Congress has ordered the Federal Aviation Administration to change airspace rules to make it much easier for police nationwide to use domestic drones, but the law does not include badly needed privacy protections.”

It will be interesting to see how industries promote drone use to their customers, without raising fears about a threat to privacy. After all, customers may not always be right, but they are always the customers.

Drones will also need to be protected from cyber attacks.

“Cyberattacks on your PC – they can steal information, and they can steal money, but they don’t cause physical damage, whereas cyber-attacks in a UAV or a car can cause physical damage, and we really don’t want to open that can of worms,” said Kathleen Fisher, the previous program manager of the DARPA project in a statement to NextGov.com

The Pentagon is currently working on developing code that will protect a Boeing Little Bird unmanned aircraft from being hacked. Defense industry programmers are rewriting software to safeguard the computer onboard the helicopter drone and aim to have the project completed by 2017.

The Future

It’s exciting to think about what drone technology will bring to companies and their customers – and to people everywhere. Let’s face it, if we think we have seen the complete potential of what customer experience has to offer, then, well, we’re being naive. The new drone technology will reinvent customer experience once again. And the best part? We all get to see how it unfolds.

The future seems endless for drones. Whether you feel they are an invasion of privacy, or they will begin to make our lives easier and aid society in ways that haven’t even been thought of yet, drones aren’t going anywhere any time soon. If you need to put it in perspective, a white paper featured on Cognizant.com notes that 40,000 drones are expected to deploy in 2015, and this is a number that will continue to increase each year. This industry is ready for take-off.

drone 2

If you haven’t come face-to-face with a drone yet, don’t worry, you will.