As sophisticated, next-gen technology makes its way across global IT landscapes every day, another revolution may be round the corner. Drones and robots are being quickly adopted across many industries including Media and Entertainment, Defense, Retail, Energy and Utilities. Can the Insurance sector afford to ignore this unmanned, task automation revolution? Certainly not. To differentiate in the fiercely competitive market, upgrade operational efficiencies and provide superior customer experience, insurance companies are now exploring the world of drones.
Early adopter cases include usage by two insurance companies – Erie Insurance and Allstate. In 2015, Erie Insurance received the Federal Aviation Administrations (FAA) nod for deploying drones to automate and accelerate underwriting and claims processes. With such innovative and pioneering drones-based claims processes, the company not only reduced claims cycle time, but also assured employee safety at inspection sites especially in rough terrain and areas with history of natural disasters.
A year later, in 2016, another insurance company, Allstate, in a pilot conducted in Texas, US, deployed Quadcopters (or drones that resembled helicopters) to assess home damage in hailstorm affected areas. Besides faster risk assessment, these unmanned aerial vehicles or UAVs eliminated manual claims processing interventions, and significantly reduced claims processing time.
In the near future, drones with their ability to quickly gather large volume data across terrains, will be able to reduce fraudulent claims in the agriculture and farm insurance areas. And use cases dont end at risk mitigation. Drones can also prevent risks. With their 24×7 surveillance ability, drones can quickly identify threats from natural disasters such as volcanic eruptions, floods and hurricanes. This real-time surveillance data can be used to rapidly send disaster advisories and alerts to affected areas. Drones will also benefit the customer with personalized insurance pricing, based on more accurate property and risk assessments. As drones can confirm the existence of features that make properties more (or less) risky to insure, personalized premium amounts can be quickly calculated based on far more precise inputs into pre-defined pricing algorithms.
Recognizing the game changer potential of drones, the FAA too has made drone deployment easy, through its revised drone usage policy. Instead of a licensed pilot and an observer, drones can now be managed by people who have passed the drone piloting examination. This revised, drone-friendly regulation, combined with success of early adopter pilots, should drive drone usage across the insurance value chain. The outcome will be streamlined and optimized property and casualty insurance processes. With the ability to easily carry out activities otherwise performed by humans, drones allow for safer work conditions of insurance employees too.
Drones have the potential to drive game-changer customer experience, but are insurance companies prepared to fly?
To leverage this technology, and what could very quickly also become a business model disruptor, insurers will need to address new challenges, by re-inventing their IT strategies. And most importantly, re-visiting their Quality Assurance (QA) & Testing processes. I will discuss that in more detail in my next post.