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August 23, 2016

Since drones inception in the commercial world, every industry is imagining ways in which unmanned aircraft systems (UAS) can transform their business. According to the US Federal Aviation Administration (FAA), sales of UAS for commercial purposes are expected to grow from 600,000 in 2016 to 2.7 million by 2020. Not surprisingly, the FAA allocated USD 63.4 billion for the modernization of the United States air traffic control systems, as well as an expansion of airspace to accommodate the commercial use of drones.

So what do these numbers imply? Drones, powered by autonomous systems, have the potential to deliver immense benefits, coinciding with insurers ongoing transformation of their business models from settlement to prevention. Insurers are reimagining their claims and underwriting processes to reduce manual interventions for inspections by leveraging drones, thereby improving efficiency and reducing cycle time. Heres a closer look at how:

Potential for claims analysis and settlement
In the event of a catastrophe, drones enable you to access hard-to-reach locations for damage evaluation and facilitate faster claims settlement. Previously, insurers efforts to help claimants with speedy settlements were sometimes hampered by adverse conditions, with access problems making it hard for adjusters to reach the scene. But drones can handle numerous cases within a geographic zone in a short time and eliminate risks to the field agents.

Leveraging drones for aerial inspections can dramatically increase adjuster productivity by automating activities such as data entry and even roof inspection. Roof insurance claims due to weather damages account for a large portion of claims. Thankfully, with drones, adjusters no longer need to inspect roofs themselves, substantially increasing worker safety. Drones also eliminate the need for multiple site visits in person.

Huge returns come from how the use of drones affects loss measurement accuracy. Earlier, adjusters were likely to over-measure approximately 5% of the roof area, leveraging conventional measurement and approximation techniques. Now, with rich sensor data and the field of view offered by drones, measurement errors could be reduced significantly, resulting in more accurate claim pay-outs.

In addition to the cost associated with the damage, the cost of processing and closing the claims can be phenomenal – a task that can now be automated. Property and casualty companies are turning to new technologies powered by drones to improve efficiency, reduce costs and increase ROI when processing roof damage claims.

Impact of image and data analytics
The complementary analytics of environmental data from external sources which drones can help capture also provide opportunities for optimizing operations. For example, in case of a hailstorm, the policy administration system can determine the households potentially impacted by hail damage. Based on the proximity of the location, autonomous drones designated to handle the area can take off and set course to cover households in a particular storm travel path.

In another implementation, sensors attached to a home can provide additional information, either to trigger a visit by the drone or as inputs to settlement. For instance, water leakage, temperature variation, fire, and others can be detected via sensors deployed in the home and can trigger quick inspection by the designated drone.

With image processing, communication techniques, and weather data analysis, the drone can automatically identify and assess damage. The insurers claims management systems, with data provided by the drone, can then calculate the replacement cost and initiate pre-settlement of any claims.

Such implementations can create a revolutionary claim settlement experience, both for insurers and for insureds, with quantum leaps in operational efficiency.

Next steps?
To gear up for the exciting journey ahead, you need to invest in the right infrastructure, processes, and capabilities, and define robust business strategies to support the use of drones. Evaluate the benefits and limitations of using drones by choosing a few use cases to conduct field trials.

Drones promise disruptive potential for insurers at a time of sluggish growth. Make drones an integral part of your innovation ecosystem to boost productivity, reduce costs, and enhance customer experience.

Join me for a discussion on how drones can help reduce property claims costs and improve productivity and customer experience at the 2016 ABI Property Conference, 29 September, London.

Fridtjof is an ex TCSer and was the Head of the Insurance Practice for Tata Consultancy Services (TCS) in Europe. Fridtjof started his career in 1984 with AXA and has gained deep domain expertise in Insurance and Re-insurance based on the roles he handled at AXA, Allianz, Hannover Re, GE Employers Re and other financial services organizations. Fridtjof has spent 15 years in the IT consulting and services industry. Prior to joining TCS, he led IBM's service business with Allianz globally, and helped build Pegasystems' Central European Insurance practice.


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