Nationwide Drops Long-Time Customers Using Drones and AI

A Decades-Long Relationship Ends Abruptly

For 30 years, the Reslers faithfully insured their car and home with Nationwide, paying their premiums on time and rarely making claims. They built their 1,497-square-foot ranch-style home themselves in Colony Lake, Chapel Hill, and believed they were in a low-risk area. But last September, they received a nonrenewal notice from Nationwide, leaving them stunned and scrambling for new coverage, reports The News Observer.

The Role of AI and Aerial Imagery

Nationwide’s decision to drop the Reslers was based on data from Cape Analytics, a California-based firm using geospatial imagery and AI to assess properties. Without even sending an inspector, Nationwide used an aerial photo to issue the nonrenewal, giving the Reslers just 30 days to find new insurance.

Nationwide, which insures about 7.3% of North Carolina’s policies, announced it would drop 10,525 homeowners’ policies in Eastern North Carolina. It’s unclear if the Reslers were part of this larger pullout. Nationwide did not respond to requests for comment.

A Surge in Nonrenewals and Privacy Concerns

Using drones and satellite images for insurance underwriting is becoming more common. It’s quick, cheap, and legal. In North Carolina, drones can fly up to 400 feet above a house if following FAA regulations. However, as weather-related risks increase, insurers like Nationwide and All State are using these technologies more aggressively, leading to a surge in nonrenewals and denied claims.

This practice raises privacy concerns and questions about fairness, especially as residents face rising premiums. Consumer groups argue that customers need more protections, such as requiring timestamped images and an appeal process to correct errors and maintain coverage.

Fighting Back and Finding a Solution

When the Reslers received their nonrenewal letter, they requested the roof report from Cape Analytics. The report, based on a May 5, 2023, aerial image, stated the roof was in “poor condition” due to minor discoloration and streaking, but found no defects. The Reslers, who had installed a new roof in 2011 with 40 years of coverage, had it power-washed and re-inspected by the original installers, who found it to be sound.

Despite providing this documentation to Nationwide, the Reslers had already switched insurers, saving about $200 a year with more coverage. The experience taught them an important lesson: loyalty to an insurance company doesn’t guarantee reciprocation.

DroneXL’s Take

The increasing use of drones and AI in insurance shows the technology’s potential to streamline processes. However, it’s crucial for consumers to be aware of their rights and options. This case underscores the importance of advocating for oneself and being proactive in seeking better deals and protections. While technology can enhance efficiency, it must be balanced with transparency and fairness to serve consumers effectively.