5 Ways Drones Will Impact the Insurance Industry by 2020

drone insurance vertafore technology disruption

The drones are coming, the drones are coming!

Think back to just a few short years ago: recreational use of drones didn’t even exist – they were primarily just for military use. Now, drones are becoming increasingly common for domestic and commercial use due to their affordability and accessibility. I’m pretty sure I’m not that only one who’s had a drone ruin a scenic view for them.

And we’re already seeing this rapidly expanding industry unfold right before our eyes.

Last year, the Federal Aviation Administration approved its 1,000th commercial drone permit; according to the Association of Unmanned Vehicle Systems. Drone deployments are expected to triple over the next five years to an astonishing 125,000.

Major companies have already announced official plans to start rolling out delivery-by-drone programs, such as AmazonUPS, and Domino’s (At least we won’t have to tip the drone for the pizza?). Just this week, Mercedez-Benz and Matternet unveil plans to roll out vans that work in conjunction with autonomous drones that could change the way small packages are delivered.

mercedes matternet drone delivery flying technology vertafore

As for your personal use, say goodbye to battery-powered remote-controlled helicopters and say hello to your new and sophisticated (tiny) piloted aircraft!

There’s few technological advances as captivating as the use of drones – but the downfall to unprecedented technological advances are what the implications will mean for industries adopting them (or not). Here are five predictions for how drones are going to disrupt the insurance industry (among others) by 2020:

1.   Drones as the fastest growing sector within aviation
The FAA (Federal Aviation Administration) estimates that drone sales will rise from 2.5 million to 7 million in 2020, with 2.7 million of those exclusively for commercial purposes. Which makes sense, because drones have already disrupted other industries such as aerial photography and filming – drones are much more versatile, easier to fly, and cost-efficient when compared to cranes, helicopters and airplanes. Industries, especially insurance where it’s known to be technology laggards, that have yet to tap into drones are going to be left behind.
2.   Insurance claims will be efficient and instantaneous
Insurance is set to be one of the top five markets to utilize drones, and for good reason. Imagine if your property damage claims no longer took weeks to process… with drones, this could take literally minutes. The versatility of drones allows insurers to have aerial views of the property, which means immediate survey of the damage or catastrophe for insurers, all done in a short amount of time.
3.   Setting a precedent for personal drone usage
As far as personal use of drones, the technology is moving at such a pace that there isn’t a precedent to follow when it comes to insuring personal use of drones. Here’s what we do know so far: it’s treated as personal property, but most insurance companies exclude liability related to an aircraft of any kind from their personal liability policies. With the rise of drones, this could very well change much sooner than in the next 4 years.
4.   Insurers will be drone pilots 
The new rules established by the FAA makes getting a license to fly a drone for commercial purposes easier than getting a license to drive a car. Prior to Part 107 (the new set of rules), any company flying a drone had to have a pilot’s license. As of August 29th, that was replaced by a knowledge test and a drone-specific certification. Sounds simple enough, right? That means practically anyone could fly a drone for personal or commercial use — not only does it mean a faster way of tapping into drone usage, but cheaper and much easier as well. FAA Administrator, Michael Huerta, stated ““The FAA forecasts there could be as many as 600,000 unmanned aircraft used commercially during the first year after this rule is in place.”
5.   Redefining insurance and the customer experience
Let’s face it: customer demands are constantly changing, and in the ever-evolving digital age that we live in, they are going to want better, faster, and more personalized service. For insurers, this might mean processing a claim in a few short hours. Or simply expanding your policies to include drones for not just commercial use, but personal use as well. However, there is still a lot of regulatory uncertainty surrounding drones – especially liability – and insurers are scrambling to make sense of how adequately insure both the drones, the people that use them, and the companies that use them.

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