Tag: fraud

Drone Technology

How Drone Technology impacts the Insurance Industry.

Drone Insurance

Many new technologies impact many different industries on a daily basis.  As long as there has been commerce taking place, there have been new and better technologies that have come along to shake up things for most industries. No matter if it was Benjamin Franklin discovering electricity in the 1700’s, Alexander Graham Bell inventing the telephone in the 1800’s, the Wright brothers inventing the airplane in the 1900’s or Mark Zuckerberg inventing Facebook new technology has been developed longer than the United States of America has been a country.  Companies that adapt to technological change are the companies that succeed in the long term. Today, many technologies are changing our lives at a dramatic pace.  None more apparent than drone technology.

Drone technology is advancing at a very rapid pace. As the technology advances the capability of the drone is growing and the price to enter the market place is dropping dramatically.  Because of this people are buying up drones at an enormous pace. What far too many of these drone owners do not realize at this time is the type and amount of risk they are taking by operating a drone.  This applies whether the drone is being used for commercial or personal use and whether the person is on their own property or on the property of a third party. Here are a few ways that drones will impact the insurance industry now and in the future.

Drone Technology

What industries are using drones to do business?

Construction Industry –    In the Construction Industry  business owners can use drones to analyze a property in ways that were not imaginable just a decade ago. They also can aide construction companies in the repair of facilities after an accident or natural disaster.

Insurance Industry –  The Insurance Industry is using the technology to examine properties after a natural disaster to get a jump start on which properties need the most examination and at what part of the property.  In the future drone technology may be able to aide in the prevention of fraudulent insurance claims by taking pictures of insurable assets periodically throughout the policy period.

Real Estate –  Real Estate agencies are able to get an in-depth look a the properties they are working with in new ways. They can use this technology to give their clients an even better idea of the property they are purchasing or selling.

TV Media –  Drones will give the television industry the ability to get to even more places when covering live footage or it can allow a camera to get to a new place that was not possible before.  Laws and legislation over the next few years will determine how much this technology will be allowed in the media.

Search and Rescue –  Search and Rescue groups can use drones in some scenarios instead of helicopters. This will put the operator of the helicopter in danger less often and will allow the search and rescue teams to get to new places that a helicopter cannot access.

 

Beneficial impacts of the drone industry on insurance. 

Drones and aerial photography can speed up the processing time for claims.  With the use of drones the time to process a claim may move from a few weeks to a few days to eventually a few hours.  Because of this quick turn around in processing, companies in the insurance industry will be able to hire less employees or it can free up more employees to service customers in different ways. This will increase the level of service they are able to provide and lower the price they are forced to charge customers for coverage.

Fraud Prevention is another beneficial part of the use of drone technology on the insurance industry.  The main way drones can aide in preventing fraud is by allowing insurance carriers to more easily monitor what a property looks like throughout the period of the policy.  If they can fly a drone out to observe your property once a month or even once a quarter it is more likely to be able to prevent people from filing fraudulent claims after a natural disaster like a hurricane or a tornado.  This is a prime time for property owners to claim damage to their property was caused by the natural disaster when in reality the damage occurred much sooner and was not a covered loss.

 

Challenges drones present for the Insurance Industry

Start-ups will pop up that challenge the current business model.  A few businesses have already poppped up to serve drone users in ways the traditional insurance industry is not able or prepared to.

Verfily and Dart Drones are two such companies that have already formed to fill a void in the drone market.  Verifly is a that offers drone users the opportunity to buy insurance coverage for a small amount of time when they will be using the technology.  When the drone is not in use they do not have to pay for coverage of the product.  This is especially beneficial to businesses who want to use the technology, but may use the drone only a few times a month or even only a few times a year.  Dart Drones is a business that sprung up because there currently is no industry standardized license for operating a drone. This business offers classes and certifications on the proper use of a drone.  This will allow a business owner to show his insurance company the people using the drones are trained professionals and it is a way for the employee to show they are prepared to operate the drone for the needs of the business.

UAV

Like many things in life, every problem presents an opportunity.  This is very much the case in the drone industry.  Successful insurance industries in the future will be the companies that can harness technologies like drones for their benefit and use the technology to gain a new share of the market they did not have previously.  The companies who are the quickest to adopt this technology and offer coverage for it users will position themselves to be the leaders in this potentially high growth portion of the insurance sector.

 

Workers Compensation Fraud

Fraudulent Workers Compensation Claims – How to Defend Against Them

Over the course of 10 years writing workers compensation insurance, throughout the country a very common conversation I have with business owners is “that claim was fraudulent”.   For the most part the explanation I am given seems correct, but the story is only one-sided.  For that reason, how can I fully agree with the business owner. Fraudulent or not, workers compensation claims cause the overall cost of the coverage to increase almost immediately for the business owner.

One solution rarely thought about is requesting your company loss runs periodically throughout the year. Some business owners are so disconnected from their employees that claims are filed without the business owner knowing what really happened. I have personally insured a business that suffered a $180,000 fraudulent claim and the business owner didn’t realize the injury was serious. Certainly not serious enough to amount to $180,000 in medical costs, compensation and the attorney fees. From my perspective I have to ask:  How do you not realize a fraudulent injury occurred, that has a large effect on your insurance cost, until the increase happens? As a business owner, by requesting your loss runs periodically you can monitor 2 very important things. 1. Which employee filed a claim?   If the claim is fraudulent then you can catch it early enough to attempt to fight the claim being paid. 2. Has the insurance carrier properly closed the claim? When claims are “open” the insurance provider typically sets aside an amount in a reserve account. This amount is for just in-case the claim pays more.  For example, if someone hurts their back, goes back to work and re-injures their back.  This is what the reserve amount is for.  The reserve amount counts against your claims history until it’s closed.

Another solution is having the same supervisor, foreman or key employee being responsible for handling all claims. One of the best solutions I have ever heard was a nursing home. This nursing home required all injured employees to report to their claim to one supervisor.  That supervisor was required to write the report, drive the employee to the doctor’s office and listen/report the information relayed to the doctor by the injured employee.   By doing this the story has been told twice with the same details and reported by the medical professional within their file. Almost all of us have smart phones that allow the supervisor and employee to take pictures or video the interview if needed.

The easiest solution to avoiding fraudulent claims is creating a safe work environment. Safety within the workplace and enforcing those requirements are the easiest way to avoid claims. A great first step is to have the business owner, supervisors and key employees almost always present when the employees are working. As the business owner you need to show the employees you care and appreciate them.   Reward employees for long periods of time where 0 claims occur. If at all possible, develop a return to work program. By creating a return to work position, with light duty the employee is motivated to return to work quicker and reduces the overall cost of the claim.   Your workers compensation provider can assist with setting up a return to work program.  Ask them for assistance and documentation for setting up a program, make sure you input into your employee handbook.