Drones in insurance: how the technology changed the industry and what to expect from it soon

Drones have revolutionised the insurance industry, making it more efficient, accurate and better suited for the challenging times we live in. How did this radical change come about, what are the real advantages of drones and what can we expect from the technology? Let’s find out!

Commercial drones – what are they?

Before we dive into details of drones’ application in insurtech, let’s look into what drones actually are and how they can be used. 

Drones (also known as UAV – unmanned aerial vehicles) are small, lightweight remote-controlled vehicles that operate without the need for a human on board. They can be sent in all directions, are easy to use and can take high-resolution photos of the area they cover, using wireless connectivity to transfer data.

Although most often they are used as small aircrafts, drones can also be sent underwater to survey the depths of water reservoirs or similar. In such cases they are called underwater ROVs (remotely operated vehicles).

The drones most of us have seen are used for pleasure, mainly to take aerial pictures. But apart from being just fun, they have an incredibly important role supporting people at work. When used for such purposes, they are called commercial drones. 

Commercial drones uses

Commercial drones are used in many industries, to improve efficiency, security, and productivity. Here are some examples:

Drones in the military

Drones were first used by the army – they are incredibly efficient and helpful tools when it comes to spotting enemy’s troops or directing attacks. Specialist military drones may also be used to carry small bombs for use in targeted tactical strikes. 

Commercial drones in agriculture

With the increasing expectations of delivering more food with fewer resources and limited farmland, farmers use drones to automate some of the tasks traditionally performed by humans. These include spraying agricultural fields or surveying the land and quickly spotting any problems when they occur.

Commercial drones in construction

In construction, drones are used to survey construction sites and to provide updated information about them. They are also used to spot any problems, saving time and resources by allowing workers to address all challenges quickly and at an early stage of construction processes. 

Commercial drones in insurance sector

In the insurance sector, drones are mainly used to map and survey insured areas, helping to assess damages and document incidents. They provide insurers with priceless information, facilitating better decision-making processes and simplifying claims processing. 

Tools for drones 

To work efficiently and make the most of their possibilities, drones need to be equipped with special tools. The most essential ones include: 

GPS

Most commercial drones are equipped with a Global Positioning System (GPS) that allows them to navigate accurately. Such a solution does have some disadvantages however, especially indoors, when the use of GPS is often limited – hence the need for commercial drones that can operate without GPS too.

Cameras

Since drones are mainly used for taking photos of a given area, they need to be equipped with small cameras that take photos, record videos etc. The types of cameras used in drones include embedded cameras, thermal cameras, infrared cameras, and HD cameras. 

Infrared 

Infrared cameras allow for night-time usage of drones, as they pick up infrared light, not visible to the human eye. IR also helps gather useful information when inspecting roofs: it can help establish their age, water damage, and integrity. 

Depth sensors

Depth sensors such as LiDAR (Light Detection and Ranging) are used to scan the ground and measure it. They are now used to produce high-res maps and 3D models of objects. 

Drones in the insurance sector – a short history

The first industry that used drones was the army. The great success that followed convinced other sectors to start using UAVs in their operations. The 2014 FIFA World Cup was the first mass event when drones were used for security measures, monitoring people attending the games. Four years later, insurance companies used drones to survey areas affected by Hurricane Harvey in Houston, USA, showing that IoT in the insurance industry can make a huge difference and can help develop the whole sector. 

Since then, the use of Internet of Things in insurance has increased dramatically. The US Federal Aviation Administration (FAA) estimates that currently more than 314 000 commercial drones are being used in the US, and 17% of them are utilised for insurance purposes. PWC predicts that by 2030 over 70,000 commercial drones will be used in the UK, and 2,500 of them will be used by insurers. According to the Business Research Company the top players in the drone insurance market are Allianz Global Corporate & Specialty, AIG US, Avion Insurance, Driessen Assuradeuren, Coverdrone, SkyWatch.AI, Flock, CapriCMW Insurance Services Ltd., Hub International, and Air1 Insurance.

Drones and IoT in insurance

Drones are one of the most impressive examples of IoT’s application in insurance. They help solve two important problems: 

• risk mitigation, by improving data collection and analytics,
• cost management, by providing better accuracy, faster results and delivering higher customer satisfaction. 

The main role of drones in the insurance industry is to gather and provide information to support claims processing, assess risks, monitor damage and access dangerous or remote locations.

Drones’ application in insurance

The most important roles drones play in the insurance sector include: 

Preventing claims from happening

Drones are perfect tools when it comes to risk management. Their ability to collect appropriate data and reach any place in no time make them invaluable in preventive maintenance and better allocation of resources. 

Assessing risk 

In claims processing, drones play a vital role when it comes to understanding the reasons  why certain events happened (for example a fire) and spotting the damaged area (for example after a hurricane). They verify the scale of the damage; they also take high-resolution pictures allowing humans to assess the actual loss and process insurance claims faster.

Inspecting property

Drones are used extensively for inspecting land that is to be insured. They allow for quick access to places that are very large or geographically remote, making insuring those properties much easier.

Inspecting roofs

Another interesting way of using drones for inspection is inspecting roofs. Before insurers started using UAVs, such an activity has always been linked with an increased risk for all humans involved because the roof had to be physically accessed by ladder or similar. Drones address that issue, making roof inspections easy,quick and remote. 

Fraud monitoring

An effective drone application is fraud monitoring, checking the validity of certain claims by verifying photos taken by a drone before and after a reported incident. Such a use of drones makes fraud monitoring more proactive and efficient. 

Examples of drones’ implementation in insurtech

Here are some of the most interesting examples of how Internet of Things technology and UAV in particular have changed the insurance industry.  

Crops insurance – agriculture

In agriculture, one of the main challenges has always been bad weather. Severe weather conditions such as hurricanes regularly destroy fields, bringing massive losses for farmers. For insurers, it was always a challenge to assess the scale of those losses and inspect the whole affected area. 

Zurich North America developed a drone programme with the aim of making the crop insurance process easier, quicker, and less expensive. Their drones are equipped with customised software, allowing them to map the location of damage, which makes it easier for insurers to deploy staff to assess the size of it.

Property insurances 

Drones are a great tool when it comes to inspecting properties, especially roofs. Thanks to special tools they are equipped with they can assess their condition, both before and after a damage occurs. Before insurers used drones, accessing damaged roofs was difficult and risky, and used to slow down the claim processing. 

Natural disasters monitoring 

After the first drones were used to monitor the consequences of Hurricane Harvey in Houston, USA, they are now being applied when a natural disaster such as flood, wildfire, tornado or avalanche occurs. They help assess the scale of the damage as well as locate victims of disasters more quickly. 

Solar panels, wind turbines, hydropower plants – insurance and claims

Drones are now used to assess and monitor solar panels, wind turbines and hydropower plants, making sure they are maintained correctly and that their conditions are always good. When damage occurs, drones help inspect those facilities, allowing for faster and more efficient claim processing. 

Advantages and disadvantages of using drones in insurance

The main advantages of using drones by insurers include risk mitigation, cost effectiveness, better decision making, better data for analysis, better access to remote and dangerous locations, improved availability 24h a day and protection of humans in the areas that are hard to access. 

Financially speaking, insurers using drones note incredible savings when it comes to payment processing of claims, resource management and workforce safety.

But such use of IoT in insurtech also has some limitations. The most critical ones are:

• legislation which varies in different countries and sometimes include limiting the freedom of movement for drones,
• initial costs of setting up the drone system,
• risk of damaging someone’s property when using drones, 
• privacy issues, meaning trespassing and operating below navigable airspace.

Despite those challenges, drones are increasingly popular among insurers and the importance of using this technology is indisputable.

Basic software needs for drones in insurance 

When it comes to the right software for drones, the most important aspects to take into consideration are: 

• processing and analysis of aerial data
• AI and deep learning algorithms for autonomous navigation, obstacle avoidance and image recognition  
• mapping 
• Data transfer (sometimes in very large volumes).

Drones in insurance – the future is now

The use of drones in the insurance world is constantly growing. According to DRONEII’s Drone Market Report, the global market is now worth about $30.6 billion. In the insurance sector, the drone market is expected to reach $1.41 billion in 2025 at a CAGR of 5.9%.

With the rapid development of IoT, drones are expected to revolutionise the insurance industry even further. New technologies such as autonomous avoidance systems will make them safer to use, making drones even more popular and widely used. As a result, they will generate more business and bring tangible benefits to both insurers and their clients. 

Looking to introduce drones into your insurance operations? Do get in touch with us. At Eversoft, we have  vast experience in providing our clients with the right software solutions that take their businesses to the next level.