Japanese insurance giant to offer commercial drone insurance
A leading Japanese provider of property and casualty insurance and has joined forces with Flock, a UK-based insurtech that offers insurance solutions to commercial drone operators.
Sompo International Holdings is the second-largest property insurance company in Japan only behind Tokio Marin. The corporation has an extensive global footprint with nearly 80,000 employees in 228 cities in 30 countries, looks set to increase the availability of critical insurance for the emerging commercial drone industry.
Up-and-coming use-cases for this growing sector include drone cargo deliveries, flying taxi passenger flights, and drone swarm shows.
Sompo International has aviation and aerospace insurance underwriting experience and this will be combined with Flock’s real-time risk algorithms to offer a unique service to the drone industry.
Currently, Flock’s drone insurance products provide cover thousands of pilots operating across the UK and Europe. The insurtech has also been using proprietary technology to explore reinventing insurance for other speciality sectors.
The commercial drone industry is enjoying an upward growth trajectory as more and more use cases for drone usage emerge. According to industry reports, new technology drives the market as sensors carried by airborne devices have become increasingly complex. Currently, drones are used to collect essential data for a wide range of purposes.
· Visual data: This is by far the most common type of data drones collect.
· Thermal data: Aerial thermal data can help firefighters determine where to focus their efforts during an active fire, or help inspectors identify potential problem areas in a solar array.
· LiDAR data: Aerial LiDAR is used to create 3D maps of an area, used for project planning or progress tracking.
· Multispectral data: This is used in agriculture and conservation to monitor plant and tree health. It's also used by law enforcement to help find human remains.
· Hyperspectral data: Currently used in agriculture to monitor the health of crops, as well as security and defence for detecting trespassers.
According to a recent report, drone technology is also deployed to inspect nuclear power plants for safely and analysis purposes.
Julian James, Sompo International’s CEO of international insurance, said both insurance brokers and disruptors must collaborate to create new solutions to meet the emerging risks of the commercial drone market.
“The sheer breadth of applications means the global commercial drone market is expected to be worth in excess of US$40bn by 2025,” James explained.
He continued, “Flock is a market leader in this sector with tremendous potential; it has a proven business model utilising a transferable and scalable technology that has already delivered unique products and an impressive growth story.”
Flock’s CEO, Ed Leon Klinger, added, “By combining Flock’s data-driven approach to risk with Sompo International’s significant expertise and established global distribution networks, this partnership marks an important milestone in the evolution of drone insurance globally.”
Global investment in insurtech reaches all-time high
Global investment in the InsurTech sector reached an emphatic record during H1, 2021, as half-year funding of US$7.4 billion exceeded full-year investment in 2020, and in every other year, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
It was found that the latest quarter saw 162 deals yield more than $4,824 million in investment, a 210% increase over Q2, 2020. The enormous quarterly total, itself more than any annual total before 2019, was driven largely by 15 mega-rounds of $100 million or more. Collectively, these deals reached $3.3 billion, or two-thirds of total funding during the quarter. The money was raised predominantly by later-stage players seeking expansion.
A need for the insurance community to reflect digital changes
Series B and C fundraisings drove a large number of deals in the second quarter, but the number of early-stage deals also increased. They were up by more than 9% from the previous quarter, and 200% from pandemic-stricken Q2, 2020. As a percentage of overall deals, early-stage activity held roughly steady, at 57%.
InsurTechs focused on distribution accounted for 55% of start-up deals, and for 10 of the 15 mega-rounds. Most of the distribution InsurTechs target reduced dependence on agent channels. Of all Q2 deals, 73% were for P&C-related InsurTechs, while 43 companies raised funds for L&H technology. Funds were raised by companies from 35 countries, including new entrants Botswana, Mali, Romania, Saudi Arabia, and Turkey.
Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “As technology changes our lives, society will demand an insurance community that reflects and supports our changing, digitally empowered behaviours. Consumers and businesses increasingly expect insurance to be delivered when and how they want it, and risk carriers that fail to respond will fall away over time. To embrace technology is a minimum survival condition. Those that use it to redefine service in the insurance world will thrive. That means a positive future for InsurTechs that bring a truly differentiated business approach to our industry. Some of them will create untold long-term opportunities for themselves and the insurance sector.”