Innovative Drone Use in Insurance Claims

The devastation brought by recent hurricanes creates an immense operational problem for insurers – namely, how to access often hazardous sites to accurately assess property damage. Drones equipped with cameras and data collection sensors are an attractive alternative to the costly and potentially dangerous practice of sending adjusters to crippled communities to inspect claims.

Indeed, from the perspective of operational strategy, the use of drones in insurance – as well as emerging technologies that include automation, Artificial Intelligence (AI) and mobile applications – offers an opportunity to fundamentally redefine claims adjustment and processing.

While the use of drones to inspect damage from a natural disaster is perhaps the most obvious example of how technology can transform industry processes and improve the accuracy of insurance claims, other tools can have a similarly dramatic impact. Consider, for example, the traditional approach to assessing damage from a minor car accident: an insurer sends an adjuster (or contractor) to verify that an accident did in fact occur when a driver turned too quickly in front of another car, and that a dented fender did in fact result from the ensuing collision. The approach, in other words, is unnecessarily costly and inefficient considering the simple and straightforward nature of the business problem that needs to be solved.

Innovative insurers are recognizing the opportunity and developing mobile apps that allow customers to, for example, take a picture of a damaged vehicle and send it to their insurer. Significant additional improvements can be gained by applying AI and pattern recognition capabilities to verify claims, and further streamline the process and reduce the need for human intervention. Specifically, smart tools can analyze an image of a damaged car and provide an informed opinion (based on voluminous data on similar accidents) as to how the accident occurred, instead of, or in addition to, relying on police reports and witnesses who may not have seen the actual event correctly. In the back office, moreover, Robotic Process Automation (RPA) tools can drive dramatic cost savings and productivity gains in claims processing and administration.

The potential benefits include a more streamlined customer experience, increased cost efficiency, reduced fraudulent insurance claims and enhanced productivity and accuracy. Achieving these benefits, however, involves the complex challenge of integrating multiple tools and platforms. Smart drones, for example, need to feed data collected in the field to RPA-enabled back office systems that process customer claims. Absent this integration, drones are just taking pictures and automated back office operations are simply processing inaccurate data faster than before.

The competitive imperatives facing the insurance sector include leveraging digital and cognitive tools, while maintaining cybersecurity as a priority. As the pace of innovation accelerates, the pressure to drive transformation is making many traditionally conservative and change-averse insurers increasingly uneasy. And while “do nothing” may no longer be an option, insurers should resist the temptation to simply throw money at a technology solution to demonstrate action. Ultimately, without a strong operational foundation in place to support digital enablement, automation and data integration, even the latest technological bells and whistles will play a tinny and hollow tune.