Company Increasingly Asked to Deliver Drone-Related Claims Support Solutions to Insurers
Editor’s note: Trevor Light, director of Crawford® Aviation, explains how Crawford & Company®’s role as an ‘early adopter’ of commercial drone technology gives us a unique perspective on this burgeoning industry.
On 21 June 2016, the Obama administration unveiled new rules that will open the skies for low-level small drones for education, research and routine commercial use.
Elsewhere across the globe, regulatory conditions are slowly catching up with the rapid adoption of unmanned aircraft for leisure and commercial purposes. It is probably no coincidence that Crawford & Company Aviation is being asked on an increasingly frequent basis to deliver claims support solutions to insurers wanting to set up programmes providing drone coverage.
For insurers yet to take the plunge, there are some important observations to bear in mind.
Unlike their counterparts in the commercial airline insurance market, insurers seem broadly happy to accept this risk for themselves rather than on a syndicated basis. The market has limited claims experience, but insuring drones for commercial use is considered profitable by most underwriters with sums insured and liabilities for risks, such as bodily injury, generally within acceptable limits.
In addition, carriers tend to lean toward efficient models of distribution with online quotation engines typical of the approach in use by an industry hoping both to save money and reflect the expectations of its modern clientele.
For any insurer considering a programme for commercial drones, it’s essential to understand their typical operations in the field.
Use cases so far range from telecoms and energy companies deploying drones to check power or communication lines in inaccessible locations, to real estate services surveying property. Broadcasters have also invested, with the BBC proudly reporting from the proposed High Speed II rail depot, using its ‘Hexacopter’ in 2013. The capabilities of drones for broadcast events might seem obvious, with sporting events, festivals and other large-set pieces potentially considered fair game. However, strict rules on drone usage over large crowds render this a legal impossibility and perhaps a blessed relief to an embryonic insurance sector keen to limit losses.
Prices of these units in a commercial context range from as little as $1,200 to as much as $1 million with on-board equipment—normally a camera—potentially increasing that value. One interesting departure from the pure camera-mounted inspection case has recently emerged from Chinese manufacturer DJI, whose $15,000 crop-spraying model, ‘Agras,’ is designed purely for agricultural use.
Crawford Drone programme, which launched in Australia earlier this year. One of the many applications offered from this nationwide aerial inspection service is crop-damage analysis with our cameras deploying Normalised Vegetation Index (NDVI) infrared capability.
Drones are also being deployed both pre- and post-loss for a huge variety of property assets, and the benefits for insurers are considerable both from an underwriting and claims-reserving point of view. Buildings and sites can be inspected in a matter of hours, providing detailed imagery, live streaming, surface-area measurements and 3-D rendering. Perhaps most importantly of all, Crawford Drone can be deployed—weather permitting—to hazardous and inaccessible sites. Crawford recently deployed drones in the aftermath of severe storms along Australia’s east coast and during the subsequent flooding in Launceston, Tasmania.
Work clearly needs to be done in terms of creating the legislative and regulatory framework to support commercial drone usage worldwide. At the moment, insurers are beholden to an array of individual countries’ attempts at regulating this sector. We must also be aware that like commercial aviation, drones will experience losses that damage public perception; particularly as they become more autonomous and are allowed to fly beyond the operator’s ‘line of sight.’
Crawford is an ‘early adopter’ and as such is uniquely positioned to tell our own use case within this growing field. We hope that by doing so we can also support the insurance sector in whichever ways technology can benefit customers.