A drone is an unmanned aerial vehicle which is remotely controlled or flies autonomously through software-guided paths and GPS. Drones came to prominence because of their use by militaries for unmanned surveillance and bombing. Civilian uses include police surveillance, weather monitoring, search and rescue, traffic monitoring and crop inspection.
How drones can transform insurance
Remote-controlled aircraft are small, manoeuvrable and can carry high-definition cameras to help survey properties and assess claims. This is safer for loss-adjusters as they can remotely observe dangerous areas like steep roof lines to get a complete picture of damage. After natural disasters, they can help loss-assessment to begin immediately in areas blocked by debris or bad weather. This cuts down on claim processing time, when delays could lead to a higher chance of fraud. So drones help cut pay-out time, reduce costs and reduce fraud.
Challenges to drone usage
There remain significant challenges to expanding drone usage. The first is cost – drone bodies and cameras can be expensive, and US regulations also require an observer and trained pilot. The second challenge is safety – drone technology, especially navigation, must mature for reliability. Several near-collisions with aircraft have been reported. Regulators are still defining standards e.g. beacon parameters, pilot certification etc. to improve safety. The third key challenge is privacy – drones with sophisticated cameras can take high-definition pictures of people, private property and sensitive areas, and a privacy framework is still evolving.
Drone Use in India
Drones are not widely used by Indian insurers, but this should change as drone use grows in developed markets. The forecaster Skymet began using low-cost drones in August 2015 to assess drought crop losses in Marathwada. In October 2015, the Central Government began using drones to collect crop yield data and assess damage for insurance purposes. A pilot programme, KISAN, was started in Haryana, Karnataka, Maharashtra and Madhya Pradesh.
Insurance Drones in the United States
In 2016, Allstate Insurance launched a programme using drones to inspect property damage after disasters.Separately, Allstate joined the Property Drone Consortium, which has received approval from the FAA to use drones for further research that can help expedite damage assessment. The consortium also conducts research on drone safety and collision avoidance. The insurers USAA, AIG, State Farm and Liberty Mutual have all received approval to use drones on a limited basis, for risk assessment, loss control, surety performance and disaster surveying.
The global drone market is already worth $127 billion, and the use of drones will only grow as they become safer, cheaper and more reliable. They are already changing the dynamics of loss-assessment, and their widespread use could transform the insurance sector.