Drones in Insurance – transforming loss-assessment?
Health Insurance

Drones in Insurance – transforming loss-assessment?


Drones are being used extensively by the Military since 2000, while civilian hobbyist have started using it in the last 10 years.

Non Military usages include police surveillance, weather monitoring, search and rescue, traffic monitoring and crop inspection.

Various studies estimate the global drone market to be worth $127 billion. They also project a figure of $ 6.8 billion from drone powered solutions in the insurance industry.

Advantages of drones in Insurance

First and foremost is the size - they are small and easy to operate/manoeuvre and don’t require an airport runway for launching. This can be a great advantage as any insurer can deploy the drone with ease from wherever he is situated.

With no humans required on board, they can travel to places which could be potentially unsafe for humans.. For example a flood hit area can be surveyed aerially even though no form of transportation is available at that point of time.

Drones being light and fast can can travel /hover over a large geography which would have required longer travel times by humans. For example, drones can be deployed to record /capture a multiple vehicular road accident on real time basis cutting across traffic.

Challenges posed by drones

There remain however significant challenges in the civilian use of Drones

Complying with Civil Aviation Guidelines - The DGCA of India has provided a draft guideline recently (1st week of November 2017) wherein any drone weighing more than 2kg will need to apply for permissions, including one from the police, as also a licence and a flight plan. Further restrictions on flying zones ex. Sensitive areas, strategic locations, international borders, etc. have been specified

Managing the drone fleet – A challenging task for any civilian setup, as drones are expensive (sensors, cameras, microphones that the drones carry ) and require a separate human capital (observer, trained pilot etc.) on it.

Deployment – Training of man power, allocating of resources and lines of business where it can improve productivity.

Potential concerns that can arise from usage of drones

Though not limited to the following, we can look at these issues arising due to overwhelming drone usage in the future.

What if a competitor started flying their drones in unregulated areas and surveying their competition? This can compromise vital company secrets

Though Amazon is experimenting with delivering packages in the USA, what if a drone starts offloading potentially harmful substance at competitor door steps?

What about the privacy issues where drones equipped with cameras and microphones start recording details on individuals / families?

Drones in the field of Insurance at United States

Though initially FAA (Federal Aviation Administration) encouraged usage of drones by farming community, they supplemented it with regulations (Part 107, Rules for non-hobbyist Unmanned Aircraft System (UAS) operations).

At USA, the creation of Property Drone Consortium has brought in a collaboration of insurers, construction industry and other supporting enterprises to promote research, development and the assessment of regulations for the use of Unmanned Aircraft System (UAS) technology across the insurance and construction industries.

Insurer, American Family started working on developing a drone program around 2013, and the company now has a “batch” of adjusters training to fly unmanned aerial vehicles at the sites where clients have reported property damage or other losses, according media reports.

In recent times (after Hurricane Harvey) media reports state that Allstate, the second-largest property insurer in Texas behind State Farm, expects its drone fleet to make at least thousands of flights a week in the damaged areas once its claims processing becomes fully operational.

Other Insurance majors like AIG, State Farm and USAA have received permission early on from the FAA to use drones to improve the speed with which they can assess insurance claims.

Drones in the field of Insurance at India

No insurer has yet applied to DGCA for the usage drones in India, but this will change as drone use grows in developed markets. The weather 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. The pilot programme, KISAN, is being run in Haryana, Karnataka, Maharashtra and Madhya Pradesh.

In conclusion,the Spiderman expression “With great power comes great responsibility” is truly applicable to the technology of drones. This technology has a high future potential and appropriate regulations and usage can harness it in a manner safe to the civil society.

Indian insurers sooner rather than later should consider adopting the drone technology as it offers great advantages towards better claims servicing and assessing risk potentials over large areas.

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