The skies above storm-damaged residences are poised to get busier this year. After several years of testing and building up capabilities, many major insurers are ready to deploy drones at claim time in order to collect crucial data for claims adjusting.
According to Novarica’s president and CEO Matthew Josefowicz, about 20 percent of P&C carriers are currently deploying, or actively piloting, drones — also called unmanned aerial vehicles (UAVs) — primarily for claims. “By next year, I wouldn’t be surprised if that number doubles,” he says.
As Josefowicz points out, that’s because a drone program is a relatively easy to establish. “It doesn’t involve significantly changing or integrating with core systems,” he says. “And it replaces a dangerous and expensive human activity. It’s really a no-brainer.”
If the real-world experiences of early adopters are any guide, it’s no wonder nearly half of insurers could be in the game by next spring.
For instance, Erie Insurance estimates it take only about a third of the time to complete an on-site roof assessment. “In our experience, we can reduce a typical one-hour roof inspection to about 20 minutes,” says Gary Sullivan, vice president of property and subrogation claims at the Erie, Pennsylvania, insurer, which began testing drones about two years ago and is in the process of putting the finishing touches on its damage inspection program.
And that’s after a drone pilot has already arrived on site.
Allstate Insurance, which announced a regionally operationalized roof damage inspection drone program in April, expects it to reduce travel-related inefficiencies. “The vast majority of costs associated with the claims process is in figuring out how much we owe,” explains Glenn Shapiro, chief claims officer for Chicago-based Allstate. “About half of that expense is [adjusters] driving to [claim sites].”
“What’s more, with traditional on-site inspections, an adjuster can only complete two to three estimates per day,” he adds. “Using drones to capture images and then delivering them to the adjuster for a desk review, the same person can complete eight, or more, per day.”
On the competitive front, speedier claims processing enables an insurer to put its policyholders ahead of the rest. “When a major weather event hits an area, we want to enable our members to have the first — and best — choices among contractors,” says Kristina Tomasetti, strategic innovation director for San Antonio-headquartered USAA, which began its drone investigations in 2013 and now is in the early operational phase for roof damage claims.
Naturally, reducing adjuster risk also factors into the drone ROI equation. “If we equip adjusters with a $2,000 tool [in the form of a drone] that keeps them on the ground, it may be more expensive than equipping them with a ladder,” says Sullivan. “But even one adjuster falling off a roof is one too many.”
Although drone technology solutions are relatively mature, insurers are wrestling with the same build vs. buy paradigm so familiar in past innovation cycles for establishing a drone program.
One choice is the drone-as-a-service path, in which insurers partner with third-party companies with drone experts to handle claims. Another is to buy drones and train staff to use them internally.
Josefowicz believes that the service option is more likely to take off, but it’s still early. Some insurers are even developing hybrid models, he notes.
“Within the next 12 months it’ll be like any other technology,” he says. “The decision to develop internally, partner externally or both will depend upon factors specific to the individual case.”
Indeed, the early-adopter strategies from Erie, Allstate and USAA bear that out.
Erie: Building a fleet
Erie is pursuing the in-house route as it matches the carrier’s claims culture. “It’s our philosophy for our staff to provide the personal touch in claims handling and marry that with technology,” Sullivan says. “Using our own people to fly the drones is in perfect synchronization with our philosophy.”
With respect to technology, Erie tested multiple options and settled on DJI’s Phantom Series multi-rotor drones. Determinants included overall ease of use, image quality and the presence of a robust smartphone app, which enables setting flight parameters, supplies real-time viewing and provides quick image capture. In addition, Erie gathers stills, rather than video, to reduce the long-term storage volumes.
For training pilots, the carrier partnered with a local flight school for classroom instruction. Flights occur at a nearby third-party location, as Erie proper falls within restricted air space.
To date, Erie has about a dozen certified pilots and drones to match, with two dozen potential pilots in the pipeline and more drones on order.
While the goal is developing a program to cover exterior damage claims, catastrophe situations and front-end risk control, Erie’s immediate plans are to deploy on a case-by-case basis for claims throughout the 12 states where it underwrites residential policies.
“For this year, as we shape our operational program, we’ll use drones to continue learning what makes sense in terms of claims events and geographic location,” says Sullivan. “This will also advance our knowledge for risk control, too.”
Allstate: Partnering with an Insurtech
At Allstate, the decision to partner with EagleView Technologies for drone-as-a-service stemmed from a philosophy of speeding payments to customers, at scale. “Our goal was cutting days out of the process,” Shapiro says. “To do so, our program is about getting roof inspection images into the hands of our adjusters and eliminating their need to physically visit to sites. This made a vended drone solution the right strategy.”
Allstate announced its partnership intentions in late 2015, after several years of in-house investigations. Since then, the carrier has concentrated on modifying and integrating systems and workflow.
Now, when insureds report a claim, Allstate suggests a drone inspection and, upon gaining permission from the policyholder, schedules the job. This triggers dispatch of an EagleView pilot. The claims workflow then assigns cases to adjusters based on intake rather than geography. Adjusters access images and data via a web portal, where pre-populated information fields include EagleView satellite measurements.
This year, Allstate will use the process in four states — Colorado, New Mexico, Oklahoma and Texas — during wind and hail season before rolling it out elsewhere.
“There’s an event almost every week in those four states,” says Shapiro. “Secondarily, across those geographies there are a good dispersion of roof types to help us learn and become operationalized country-wide.”
Long-term, Allstate envisions fully transitioning to virtual estimating, inside and out. “Ultimately, we look forward to using drones for the complete exterior of homes, along with other visual technologies for the interior, to reduce customer wait times and eliminate adjuster drive times as much as possible,” Shapiro says.
USAA: Pursuing a hybrid course
USAA decided to combine an in-house drone program with a vendor partnership. “We wanted the greatest possible flexibility to determine what works best, which may be different in San Antonio than in Colorado,” says Tomasetti. “Pursuing a hybrid course provides us with the right resources and equipment wherever they’re needed.”
Over time, USAA has invested in multiple varieties of fixed-wing and rotor drones. Like Erie, the carrier is standardizing on DJI’s Phantom Series. To operate them, USAA draws on individuals from across the organization with pilot’s licenses as well as using claims adjusters certified under FAA rules.
Through its external partnership, USAA can obtain either drones or drones-as-a-service, depending upon circumstances. No matter who captures inspection images, they’re uploaded to USAA’s internal systems for adjuster access via a desktop application.
However, the adjustment model is still a work in progress. “We’re not committed to a particular method,” Tomasetti says. “For some of our adjusters, desk-reviewing has always been their process. We’re also testing instances where adjusters accompany as an observer and where adjusters serve as the pilot.”
Regardless, the insurer is currently most operationalized around roof damage from hail-related events in Texas and Colorado. This is due to the predictability of hail system damage and high concentrations of affected policyholders. In the future, USAA expects to broaden claims use cases and also will leverage claims experiences to begin identifying underwriting opportunities.
“At USAA, we concentrate on what’s best for our members in terms of effectiveness and their preferences,” says Tomasetti. “That’s why it’s unlikely technology will completely replace our traditional inspection methods. As we continue evolving our drone program, we’re focused on remaining flexible in order to utilize the best approach for a given member at any given time.”
If there’s an overall take-away for insurers, it’s not just that a drone program will soon become a competitive necessity. Like so many industry technologies, the path to successful deployments starts from the perspective that no one size fits all.
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