The insurance industry as a whole is being challenged to provide better service for a lower cost, and the drone technology that’s being rolled out at the moment has the potential to modernise and streamline many of the processes which sit behind an insurance claim, while at the same time reducing cost of providing these services through reduced reliance on human labour.
Peter Tomkins, NSW Business Development Manager at Gallagher Bassett says that in many ways the insurance industry is poised to lead the way on commercial drone adoption in Australia.
“Drones are already helping the industry both at the underwriting phase and at the claims stage. Inspections for either pre-risk surveys or of damage following a claim have historically been problematic for some assets, for example larger commercial buildings or those in remote or difficult to access locations. However, drone technology is providing a cost effective solution to the problem of capturing still and video images in those difficult areas.”
Tomkins also believes that drone technology will impact brokers.
“Firstly, as drone technology starts to be incorporated into insurance products, brokers are going to have a critical role to play in educating the their clients about their usage. Take property insurance which is one of the most obvious applications for drones any clients will be used to having a face-to-face interaction with an inspector when they lodge a claim, so there will be a period of adjustment as people get used to the idea that a drone is going to come out and snap a few photos instead.
Secondly – it’s not just the insurance industry that’s interested in drones. From couriers, to restaurants to retailers, this technology has major applications for the way all sorts of companies do business, and this creates brand new risks. Imagine talking to a Fish and Chips restaurant about whether they need aviation cover! That’s going to a very important role for brokers as drones become mainstream – helping clients understand their risks and ensure they’re appropriately covered” he says.
We’re really just beginning to scratch the surface with drone technology, it’s more than just that physical labour – drones reduce the amount of training that needs to be provided, they reduce the physical risk to inspectors and they reduce the burden of scheduling inspections. The end result is that claims decisions can be made more quickly, for a reduced cost and at greater convenience to the customer.
According to Tomkins, another important point for insurers to consider with drones is their potential to reduce fraud. Drones allow for more inspections to be conducted, and to be conducted closer to an incident occurring, making them a valuable tool in the fight against insurance fraud.
As we’ve seen with the latest extreme weather events in Australia and the earthquake related damage in New Zealand, when catastrophic events occur there can be big delays because of the time it takes for humans to be able to safely inspect the site of the incident. Drones can go where humans can’t though.
Tomkins states that he thinks drone technology is going to be great for farmers. Because drones are fast, mobile and don’t rely on roads they’re going to improve the insurance industry’s ability to offer affordable insurance products for farmers by making it cheaper to provide coverage in remote locations.
The legislation affecting drones is rapidly evolving. Effective 29 September 2016, drones weighing less than 2kg can now be flown without certification, even for commercial gains, as long as they comply with Civil Aviation Safety Authority operating requirements. The liability issues surrounding drones are very complex and are still being worked out, Gallagher Bassett recently published an article summarising the main ones that affect brokers and insurers.
However Tomkins notes that cyber risk can and does affects drones.
“A drone is guided by a computer that receives inputs via Wi-Fi or remote control. If this is intercepted, or the computer is compromised prior to launch, a third party could take over the drone, do damage with it or steal it and its contents. Cyber cover is going to be vital for anyone seriously looking at commercial drone usage.”