Drones in GI: Opportunities, challenges and risks

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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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