Drones in GI: Opportunities, challenges and risks

Read­ing time: 3 mins

Drones are clever devices that are pre­sent­ing a range of oppor­tu­ni­ties and chal­lenges for insur­ers glob­al­ly. Suba Chel­va shares key take­aways from a Mel­bourne sem­i­nar on the Use of Drone Tech­nol­o­gy in the Gen­er­al Insur­ance indus­try.

On 8th March 2017, the Young Insur­ance Pro­fes­sion­als and the Vic­to­ri­an Claims Dis­cus­sion Group held a short sem­i­nar in Mel­bourne on the Use of Drone Tech­nol­o­gy in the Gen­er­al Insur­ance indus­try. The sem­i­nar had a diverse group of speak­ers, name­ly Paul Her­mann (Remote­ly Pilot­ed Air­craft (RPA) Inspec­tor from Civ­il Avi­a­tion Safe­ty Author­i­ty (CASA)), Simon Hoop­er (Avi­a­tion Under­writer from QBE Aus­tralia) and Dar­ren Trott (Nation­al Busi­ness Devel­op­ment Man­ag­er from Craw­ford & Com­pa­ny). The sem­i­nar was very infor­ma­tive and cov­ered the chal­lenges, risks and oppor­tu­ni­ties asso­ci­at­ed with drones as well as how drone tech­nol­o­gy can be of assis­tance to the Gen­er­al Insur­ance indus­try. This was fol­lowed by a live demon­stra­tion of fly­ing a drone and a Q&A ses­sion. Some of the key take­aways from the sem­i­nar are sum­marised below.

Challenges and Risks

Just like any new tech­nol­o­gy, drones have chal­lenges and risks and the fol­low­ing is a sum­ma­ry of the chal­lenges and risk dis­cussed dur­ing the sem­i­nar:

  • Unau­tho­rised and unco­op­er­a­tive drone oper­a­tions with­in the Aus­tralian air­space. Just like pilot­ed air­crafts, there are cer­tain rules and reg­u­la­tions by CASA that drone users must fol­low;
  • Neg­a­tive pub­lic per­cep­tion of drone usage dri­ven by inad­e­quate safe­ty require­ments and pri­va­cy breach­es. Whilst CASA does its best to main­tain ade­quate safe­ty require­ments of drones, pri­va­cy breach­es such as nui­sance and tres­pass on one’s pri­vate prop­er­ty are not policed by CASA;
  • Soci­etal accep­tance of the risks asso­ci­at­ed with drones. Just as how the soci­ety is learn­ing the risks asso­ci­at­ed with autonomous and dri­v­e­less vehi­cles and accept­ing these risks, it will take time for the soci­ety to learn and accept the risks asso­ci­at­ed with drones;
  • Inte­gra­tion of drone oper­a­tions with pilot­ed air­crafts in the air­space. As drone usage increas­es, there needs to be a more sophis­ti­cat­ed traf­fic man­age­ment sys­tem to mit­i­gate poten­tial col­li­sions of drones with pilot­ed air­crafts;

Use of Drones in the General Insurance Industry

Like the util­i­sa­tion of telem­at­ics and Big Data in the Gen­er­al Insur­ance indus­try, par­tic­u­lar­ly in the motor insur­ance sec­tor, drone tech­nol­o­gy is believed (if not already) to have a mate­r­i­al impact in the Gen­er­al Insur­ance indus­try. The fol­low­ing sum­maris­es the areas in which drone tech­nol­o­gy can pos­i­tive­ly impact the Gen­er­al Insur­ance indus­try:

  1. Claims Man­age­ment:
  • Abil­i­ty to cap­ture high res­o­lu­tion imagery and video live stream­ing of cat­a­stro­phes enable imme­di­a­cy of estab­lish­ing a claim reserve;
  • Abil­i­ty to access areas that were pre­vi­ous­ly inac­ces­si­ble or haz­ardous for claims cost esti­ma­tion. For exam­ple, prop­er­ties that are dam­age by fire or asbestos claims;
  • Abil­i­ty to detect fraud­u­lent claim activ­i­ty. For exam­ple, drone imagery tak­en of a prop­er­ty imme­di­ate­ly after a fire dam­age could be used by claims man­ag­er to dif­fer­en­ti­ate gen­uine dam­age from the fire against fur­ther dam­age inten­tion­al­ly car­ried out by the claimant to increase his/her claim amount;
  • Reduc­tion in claims costs and time spent on claims by claims man­ag­er. For exam­ple, claims esti­ma­tion process which pre­vi­ous­ly utilised mul­ti­ple claims staff and hun­dreds of hours, may now only require one claims staff and sig­nif­i­cant­ly less time to assess the imagery cap­tured by the drone;
  1. Under­writ­ing:
  • Abil­i­ty to cap­ture high res­o­lu­tion imagery of assets and risks that an insur­er under­writes. For exam­ple, an insur­er under­writ­ing a com­mer­cial prop­er­ty can accu­rate­ly mea­sure the area of the prop­er­ty using high res­o­lu­tion imagery pro­duced by drone tech­nol­o­gy;
  • Reduc­tion in under­writ­ing expens­es. For exam­ple, an under­writer does not need to be phys­i­cal­ly present in assess­ing an asset or risk that it under­writes with drone tech­nol­o­gy. This is par­tic­u­lar­ly use­ful when an under­writer is in a dif­fer­ent state or coun­try to the insured. As a result, under­writ­ing expens­es are expect­ed to reduce;

There is also an infor­ma­tive video by Craw­ford & Com­pa­ny on the uses of drone tech­nol­o­gy in the Gen­er­al Insur­ance indus­try.

There is no doubt that the drone tech­nol­o­gy will con­tin­ue to emerge and advance over the com­ing years whilst the chal­lenges and risks faced addressed and mit­i­gat­ed.

Where do you fore­see the util­i­sa­tion of drone tech­nol­o­gy in the future?

Crawford & Company’s live drone demonstration

CPD Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.

About the author

Suba Chelva

Suba has actuarial experience in general insurance and has worked across a range of insurers. Suba specialises in reserving. Outside work, Suba is a member of the Risk Management Practice Sub-Committee, volunteers her time across refugee community service programs and enjoys travelling.

Comment on the article (Be kind)


No Comments

Also this month