According to a LexisNexis Risk Solutions survey, about four in 10 auto insurance companies are now using advanced insurance technology through drones, photo-taking apps and artificial intelligence to resolve claims in just a couple of days versus the traditional 10-15 days and in some cases, eliminating the in-person inspection visit altogether.
“We’re on the cusp of this major, major change,” says Bill Brower, vice president at RELX Group’s LexisNexis Risk Solutions, referring to claims handling.
In Chicago, a company assisting insurance companies in implementing the new technology says when a customer uploads photos a damaged car and a video of the customer describing the loss, artificial intelligence and automation can produce a repair estimate in about three hours.
Three states changed their regulations in 2016 to allow for photo or video evidence to be used by appraisers but some still have restrictions.
Per S&P Global Market Intelligence, insurance companies spend about 11 percent of personal property and casual insurance on investigating and settling claims so the savings can be significant.
“The faster you can settle a claim, typically the less you can settle it for, so there is a direct financial incentive,” said Matthew Josefowicz chief executive of Novarica, an insurance-technology consulting firm.
Insurance Companies Using Drones for Inspections
Insurance companies are beginning to use drones to take photos and video of storm-damaged rooftops or collapsed buildings. When there are multiple stories or steep roofs involved, traditional inspections that usually take about an hour can take more time, specialists and extra equipment.
One the forefront of drone usage, Liberty Mutual says they now use drones daily to assess hurricane, tornado and flood damage.
Consumer advocacy groups are expressing concern, however. While acknowledging that photo and drone footage can be helpful in supplementing inspections, neither may capture the full extent of damages. Auto-repair shops complain that photos may overlook significant, hidden damage and ultimately slow the process.
Amy Bach, executive director of United Policyholders says, “Hail damage can be subtle even when it’s serious.”
With new FAA rules effective August, 2016 that no longer require a pilot’s license to operate a drone, several insurance companies are now in varying states of implementing the use of drones (though they still cannot fly near military bases or airports and regulations require the drone to be kept within sight).
According to USA Today:
- Allstate used drones for spring storm damage inspections in Colorado, New Mexico, Oklahoma and Texas and plans to expand use nationwide in 2018.
- Erie used a drone for a claim inspection for the first time in September 2015 and has since used drones in Ohio, New York, Pennsylvania and West Virginia.
- Farmers began testing drones for claim inspections in January 2017.
- Liberty Mutual began using drones for a significant number of claim inspections after Hurricane Matthew hit the Southeast in October 2016.
- Nationwide Insurance is evaluating the use of drones.
- State Farm is conducting drone test flights in several states.
- Travelers us using drones for claim inspections in 30 states.
- USAA has used drones for claim inspections in Colorado and Texas and likely will expand to other states.
For now, a customer must grant permission for a drone to be flown on their property and insurance companies such as Allstate say “an adjuster will get on a roof if a customer wants a traditional inspection or if the drone pictures aren’t sufficient.”