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2017: The Year Drones Changed Claims Management

2017 represented a major inflection point for the use of drone based aerial intelligence in the insurance industry. Unfortunately the events  that precipitated this uptick in usage were the twin catastrophic hurricanes Harvey and Irma. While these events had a significant impact on the communities affected, critical data and experiences were generated by insurance carriers and independent adjusters as they rushed to meet the needs of policyholders in Texas and Florida.

 

 

 

 

 

The Storms: Key Facts
Hurricane Harvey – Category 4
Winds of 130 mph   |   $200 billion in damage   |   At least 91 deaths
 
   
 
Hurricane Irma – Category 5
Winds of 175-185 mph   |   $65 billion in damage   |   At least 134 deaths
 
 
Key Learnings From the Field
As Insurance companies processed claims as quickly possible to get people back in their homes, there were numerous learnings that came out of their rapid response:
1. Quick action requires planning:
Organize pre-staged drones and trained staff
2. Understand the regulations:
Ensure your drone operators have permission to fly
3. Focus on safety:
Avoid climbing on roofs and walking into dangerous environments
4. Prioritize claims efficiency:
Maximize claims adjuster productivity with a drone and dramatically lower loss adjustment expenses
5. Faster claims processing = Faster rebuilds:
Improve the customer experience with drones, getting people back in their homes sooner
 
 

Quick response requires planning: 

Pre-stage drones and trained staff
Pre-staging in advance of hurricanes is an established practice  in the P&C insurance industry. However, drones represent a new aspect of pre-planning and pre-staging that many carriers had  not included in their standard operations.
 
Building drone pilot training and drone  pre-staging near expected hurricane landfalls and with catastrophe response teams will now be standard practice  for these clients.
 

Understand the regulations:   

Ensure your drone operators have permission to fly
During catastrophes such as hurricanes, the FAA typically issues flight restrictions in disaster areas, “grounding” all drone flights. Harvey and Irma response teams both experienced this scenario, and FAA authorizations (waivers) were required to fly in these areas.
 
It is critical that insurance adjusters and inspectors not interfere with disaster response efforts, as unauthorized drone operations can prevent other aircraft from performing life-saving missions. Further, anyone violating these rules is subject  
to civil penalties and possible criminal prosecution, not to mention damage  
to one’s reputation.
 

Focus on safety:  

Avoid climbing on roofs and walking into dangerous environments
Climbing on roofs for inspection and measurement remains one of the most dangerous jobs in the country. The potential risk hazard liability is substantial, and is even greater when responding to catastrophes where conditions are more dangerous, and there is greater pressure  to complete inspections quickly. 
 

Prioritize claims efficiency:  

Maximize claims adjuster productivity with a drone and dramatically lower loss adjustment expenses
Insurance carriers and independent adjusters incur considerable  loss adjustment expenses (LAE) related to catastrophes. Kespry customers responding to Harvey and Irma have proven that drone solutions can dramatically reduce or displace traditional processes using aerial technology as part of the claims process, achieving significant cost savings.
3 ways to maximize claims productivity and reduce LAE:
 
1. Process faster:
With Kespry, adjusters can reduce their time for inspection and adjustment by hours through not having to climb on the roof, completing an inspection in 10-15 minutes, and benefiting from AI/ML that provides automated damage detection.
 
2.  Reduce third-party reports:
Many claims require the purchase of roof dimension reports (produced by firms such as EagleView or Geomni), which can cost between $30-$85 per report. These costs are eliminated with a system like Kespry, which includes automated dimensional analysis of a roof within a few hours of the flight.
 
3. Eliminate ladder assist:
Erase the costs spent on hiring ladder assist firms to access high or steep pitched roofs (typically over $150 per claim).
 
Budget that is being spent on roof dimension reports, excess adjuster time, and ladder assist is sizable and can be directly reduced through a drone solution. Kespry’s automation, scalability, and proprietary data analytics tools (roof report, automated damage assessment) enable customers to decrease roof claims costs by $200-$400  per claim — at least a 60% savings.
 

Faster claims processing = Faster rebuilds:  

Improve the customer experience with drones, getting people back in their homes sooner
One of the biggest challenges for insurers is to provide a differentiated and superior experience to their customers. Nowhere is this more important than when it comes to resolving claims from customers affected by catastrophes like Harvey and Irma.
 
The response to these events has demonstrated that drone technology  offers insurers a chance to greatly improve the customer experience by reducing  claims cycle times by up to 80% (Kespry customers responding to Harvey and Irma have gone from inspecting 3 homes per  day to 3 homes per hour), providing customers transparency into their claims estimation through software and analytics, and eliminating the need for adjusters to climb on the policyholder’s roof. 
While all of these benefits are important, the ability to quickly resolve customer  claims following events like Harvey and  Irma allows for the ultimate customer experience — getting property owners  to return to their normal lives faster.
 
Key benefits of improved customer experience for insurers:
1. Positive claims experiences reduce customer churn
2. Reduced acquisition costs via increased customer retention
3. Brand differentiation from competitors
 
Years from now, a reflection on the response to the catastrophes of 2017 will almost certainly be seen as the pivotal moment in the use of drone based aerial intelligence in the insurance industry. 
 
These events have shown the undeniable value of drones in the P&C claims process, as insurance carriers and independent adjusters have been able to:
 
1. Process claims faster to ensure property owners can repair and rebuild as fast as possible
2. Reduce loss adjustment expenses
3. Improve the safety of adjusters and roof inspectors