Drones in the service of insurance

Many analysts see drones as another important technology for the insurance industry. According to PwC, drones are the future of claims adjustment. I strongly agree with this forecast, at the same time broadening its scope to underwriting and periodic inspections of industrial sites, large warehouses, residential homes or crops. 

Drones are by no means just a topic for dog days of summer. Unmanned Aerial Vehicles (UAVs) are becoming increasingly available and their popularity is growing fast.

More and more industries are making use of these objects to have a look at something from above or just from a different perspective (see: Erie Insurance uses drone to inspect roof damage), or else: to deliver goods to their addresses (see: Amazon has been granted permission for small-scale testing of drone deliveries in the UK, Google follows Amazon into the sky with drone delivery tests and Zipline to expand its blood and medicine delivery drone program to U.S.).

If you think of drones only as toys for the little and big ones, it is time to change your mind. The question is: will drones ever take off big time in the insurance sector?

Military roots

Since their appearance in the public sphere, drones have aroused wide interest. Their history is closely tied to military needs. In 1849, Venice was bombed by Austrians using unmanned balloons which are today recognized as the first drones. It was not the only time when the art of war spawned the idea and development of technologies that have since been made available to the average Joe (other examples include computers, the internet, GPS and digital cameras). Even today, the army still experiments with drones. Contemporary drones are usually remote-controlled gliders, planes or helicopters (often in the form of four-, six- or eight-propeller helicopters). Taking pictures and filming from heights, monitoring, observing areas and tracking objects are their basic tasks.

Discharged

A few years ago drones went beyond the military sphere. Initially, the high price of these devices has been a hindrance to their popularity, but today we can often find many hobbies or toy models. Progressive miniaturization of electronics and the access to GPS navigation have become a major push for the development of UAVs.

The rapidly changing drone market offers more and more high-capacity, high-performance devices that are suitable for commercial applications. Although the prices of professional drones are still hard to swallow, one must admit that finding an optimal model that meets the requirements of a particular user – and does not cost a fortune at that –  has ceased to be an impossible task.

The commercial use of drones has so far been blocked by regulatory issues. In Poland, rights granted by the Civil Aviation Authority are required. However, throughout the country, one can find training centers preparing their students for theoretical and practical state exams.

Of insurers and drones

Of course, insurance applications of these devices is what we are mostly interested in. Many analysts see drones as another important technology for the insurance industry. According to PwC, drones are the future of claims adjustment. I strongly agree with this forecast, at the same time broadening its scope to underwriting and periodic inspections of industrial sites, large warehouses, residential homes or crops. Precise photography and filming of objects from different heights, close-ups and shots from difficult-to-access places are what insurers primarily have in minds.

One of the first insurance companies that examined the suitability of drones as early as in 2013 was Concordia. Next were the big guns: AIG, Liberty Mutual, State Farm and People's Insurance Company of China, then joined by Travelers (The drones are flying at Travelers), Hartford (Drones taking off in the insurance industry), and Erie Insurance (Erie Insurance sends in the drones). More examples can be found on the CB Insights blog (How Insurers are racing to adopt drones in one chart).

As you can see, the interest in this technology is spiking. The said PwC has already calculated that the potential for drones in the insurance sector equals $ 6.8 billion. The consultancy created a drone-focused Competence Center in Warsaw. It did not happen by accident: according to the Civil Aviation Authority, Poland is one of the countries where the drone market is growing at the fastest pace. In addition, we are one of the more significant manufacturers of these devices in the world, with brand names like FlyTech UAV, Novelty RPAS, Dronlab, Eurotech, Trigger Composites or WB Electronics all of a Polish descent.

 Mariusz Janczewski, Senior Insurance Consultant, Comarch