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

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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.

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