Great Heights: How Drones Are Changing The World of Insurance

By Victoria Linares Published on Jul. 09, 2020

The narrative surrounding the topic of drones has been a rather tumultuous one, oftentimes leading many to develop a negative viewpoint towards these aerial vehicles. Though drones may have a lackluster reputation in the eyes of some, they are poised for success in the insurance industry.  We know that drones can be used to gain a thorough insight into risk or damage left behind by catastrophes, but they can also be unpredictable machines, requiring an insurance plan in order to protect users from any possible liability. 

This article sets out to cover how startups are finding ways to fill this need in the market by providing drone services to insurance carriers while other startups are able to provide coverage for flights. 

Quick History

Due to strong government regulation, drone usage was not as popular years ago as it is today. However, in 2015, after the Federal Aviation Administration (FAA) allowed companies to operate drones in the US, their popularity took off. Companies all around Silicon Valley and beyond are using drones to save money, improve their efficiency, and increase their ROI. 

How Drones Are Changing The World of Insurance


How Drones Can Be Used in the Insurance Industry

Data Collection and Analysis

Although most of us don’t think about the roofs over our heads at home or in the office, insurance carriers view roofs as a very crucial element in evaluating the riskiness of insuring a property. Since flawed and deteriorating roofs can lead to more damage, and thus more claims, insurance carriers think carefully about their appetite for risk when evaluating a home, office building, or warehouse. Roof quality also affects how much an insured pays. Poor quality roofs are riskier for insurance companies and they charge higher premiums in return. 

Insurers have decades worth of data on roof integrity that they factor into their underwriting and pricing models. Higher integrity data that is provided more safely, but oftentimes at an increased cost, has the potential to save on the long term costs in claims. Drones are oftentimes the best source of this high integrity data. Rather than sending a person up a ladder, drones can easily hover over roofs, taking high-resolution pictures, thus eliminating human error, safety risks, and time inefficiency. 

Catastrophe Damages

After a hurricane, flood, or wildfire, insurance companies are entrusted with quickly assessing the damage and paying out claims to homes and businesses affected. With the growing number and severity of these catastrophes, this is no small task. Insurers need every tool at their disposal to help their insureds. Often times, after a catastrophe, areas are not easily accessible to adjusters on the ground looking to estimate damages. Drones allow for insurers to more quickly access the extent of the damage from afar.

Many well-established, well-funded startups are providing drones as a service to insurance carriers, who can utilize the benefits of drones on an as-needed basis. As a result, insurers are not required to develop, maintain, and service a fleet of their own drones, something far beyond the core proposition of risk management. According to startup Dropin Inc, dispatching a drone before and after a catastrophe exposes valuable information for insurers to quickly realize the damage and make decisions more quickly. Claims paid more quickly put insureds back on their feet sooner, strengthening the relationship with their carrier, and allowing for the smoothest possible customer experience when needed most. 

Overall, drones are “seen as a legitimate business tool because they provide an opportunity for larger companies to increase productivity, ROI, and improve safety,” says Ian Wilson, the Chief Operating Officer of  Dropin Inc, an on-demand live video inspection service for insurance adjusters. Below are some startups that are providing drone services to help insurance carriers reap the benefits that can come from this technology. 

Startups That Provide Drone Services

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DropIn Inc.

DropIn is an on-demand live video inspection service for insurance adjusters that improves the claims-handling process, increases work efficiency, and speeds up the underwriting process. Adjusters can easily hire Dropin’s on-demand ClaimsDirectTM Drone, and DroperatorTM workforce, to preview or assess claims via a live video stream. 

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Kespry’s aerial intelligence platform technology is transforming how organizations capture, analyze and share insights about their business. Among other things, Kespry is able to use drones to access roof damage in an effective and accurate way. For insurance companies, Kespry can help them close claims faster. 

Use Case: 

Since Kespry is known for its efficient roof damage assessments, EMC Insurance Partnered with them to provide their insured with a customized, value-added, roof assessment and actionable loss control solutions to help roof resiliency.  Our case study showcases the results of this partnership. 

Drone Insurance

Despite the many benefits of drones, they do at times pose a threat to the general public. In fact, since 2014 here have been 8,631 close calls reported to the FAA of instances where drones posed a threat to an aircraft. “People underestimate how much damage a drone can make” warns Thomas Wilson,  the Drone Partnership Manager from Flock, a startup that provides drone insurance. But insuring drones is quite a challenging task given the lack of information regarding the risks these vehicles truly pose. 

Why insuring drones is challenging

Lack of knowledge

Though the Federal Aviation Administration (FAA) estimates that the amount of drones in the US will reach 7 million by next year, there is still little understanding of the laws that regulate these vehicles as well as the risks that civilians or aircrafts face. With the rapid growth of these machines, many insurers are having to cover household and commercial drones which is often excluded from basic coverage. In order to do this effectively, many carriers will have to hire aerial experts or create partnerships with specialized underwriters since little is known about the risks these aerial vehicles pose. The lack of information regarding potential risks poses a challenge for those trying to insure drones. 

How Drones Are Changing The World of Insurance 1

(Source: Kennedys Law)


Pricing drone insurance is difficult for several reasons. Insurers use years of data to model the many factors they look for when pricing the riskiness of a policy. In an absence of these years of data, there is room to fine tune these models. The rise of several direct to consumer drone companies, and perhaps the most popular brand DJI, has caused in explosion in recreational drone use. This rise in usage is generating a great deal of data, but not at the scale insurers would like to see when evaluating the risk of drone insurance. For this reason, companies need to come up with a way to gather data in order to quantify this risk.  Flockcover has an “exposure based model that gathers data while flying” which helps solve this issue. Thomas Wilson, the Drone Partnership Manager at Flock warns that “the car industry is different. [compared to the drone industry]. Those insurers have years of data that tells them what the risk and damage is” while drone insurer lack this crucial information. Only time will tell where drone insurance premiums will move as the industry matures.

Safety Concerns

As mentioned before, drones can be more dangerous than some may think. For this reason, companies like Flock have taken the initiative of decreasing potential risks that may arise during a flight by providing  pilots with a risk report pre-flight in order to decrease accidents. 

Though studies show that drones are not likely to cause death, they have been responsible for injury to individuals.  In fact, in 2016 a woman in Quebec had to be taken to the hospital after a drone fell on her head. Other horror stories? A drone also crashed through a woman’s window in Manhattan and New Jersey man was arrested after accidentally crashing his drone into the Empire State Building.  

Startups That Provide Drone Insurance

Though difficult, there are a few startups that are taking on the challenge of insuring drones.  We have listed out a few of them below.

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Voom Insurance

The first insurance product created by our portfolio startup, Voom Insurance, was SkyWatch.AI. This product is a provider of an on-demand and monthly insurance for drones or unmanned aerial vehicles (UAV’s) that applies big data analytics and machine learning for its risk assessment platform. 

Competitive advantage:

  1. Skywatch app makes mobile distribution easy 

  2. Instant underwriting, issuance, and claims handling of policies 

Use Case:

Skywatch has partnered with Starr, one of the largest players in the aviation space. They partnered with Skywatch because they did not have a drone insurance product and wanted to enter the market. 

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Flock provides flexible drone insurance designed to fulfill every need. Whether you are a company or a recreational pilot,  Flock can help. Flock provides comprehensive annual risk-based coverage, unlimited coverage, or pay-as-you-fly insurance. Additionally, it aggregates and analyzes real-time environmental data to minimize flight risk. 

Competitive advantage: 

  1. Flock is the top three movers in the drone insurance market 

  2. Currently focused on UK market 

Use case: 

Flock has an exclusive partnership with Allianz, a German multinational financial services company headquartered in Munich, Germany. Allianz will be helping Flock underwrite their first products and policies which is hourly drone insurance purchased through an app. 

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Rein provides insurance solutions to customers and markets within digital ecosystems. To do this, they have created a platform that has 4 key parts: Ecosystem Management, AI and Analytics, Product Management, and Customer Management. 

Use case: 

They partnered with Liberty Mutual’s Specialty Markets business unit to offer dynamic policy solutions to address the unique risks, pain points, and insurance needs of commercial drone operator.


Gathering high-quality data is extremely important for insurance companies to be successful. Working with drone providers comes with its fair share of risks. It is a capital intensive business, one that requires raising large amounts of money to scale, maintain, and service a fleet.

One cautionary tale in the space is Airware, a San Francisco based company that raised $116M from top investors like Andreessen Horowitz, Google’s GV, and Kleiner Perkins only to shut its doors after failing to achieve profitability. Additionally, the drone insurer companies will face hurdles due to a lack of loss data and new regulatory laws. 

We are looking forward to seeing how they can change the world of insurance!

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