Taking Flight

Drone technology promises to be a progressive, useful and intriguing technological advancement for the property and casualty insurance industry. From carriers to independent adjusting firms and software companies, developments are taking place in many ways:

• unmanned aerial vehicles (UAVs)/drone insurance coverage is emerging;

• UAVs are being implemented in the claims-handling cycle; and

• sophisticated software is being developed to integrate with drone technology and feeding the information captured into existing or newly created systems pertaining to aerial, video, data and imaging.

With the seemingly endless potential benefits presented by drone technology, some within the insurance industry are already trying to implement drone technology within their current business models. However, operating within the current legislative framework for commercial use of UAVs poses challenges to efficiently and effectively implementing this technology within the insurance industry.

The interest surrounding the use of UAVs within insurance and the claims-handling cycle has generated considerable dialogue within the industry and has even prompted some organizations, including Crawford & Company (Canada), to purchase a UAV for commercial use.

The company has made progress in addressing the requirements associated with using a UAV for commercial purposes by laying the groundwork for its future use.

Efforts are currently under way in charting out various claims scenarios that would benefit greatly from the use of a UAV.

Mock scenarios are being mapped out, several staff members are being enrolled in UAV flight operation training, detailed flight operation best practices and parameters are being established in line with declared regulations, and the company will be working alongside the necessary regulatory bodies to ensure compliance with requirements.

Organizations seeking to incorporate UAVs from a commercial standpoint need to take the necessary steps to map out an appropriate framework to effectively address regulatory requirements and ensure future success on this front.

UAV BENEFITS IN A LOSS SCENARIO

Safety and access

Using UAVs in place of human beings to access remote locations or unsafe and hazardous loss sites, and then feeding the necessary information to claims professionals to prepare initial reports, could prove invaluable.

In the event of a catastrophic event, a UAV can be deployed to scope out affected areas and pinpoint locations with the highest severity of loss.

Able to survey large areas and multiple properties in a single flight – a process that could otherwise take days or even weeks – the value of UAVs to adjusters is the ability to deploy rapidly and collect visual evidence from loss sites.

Information sharing

The information gathered provides adjusters with the necessary intelligence to determine areas on which to focus their initial attention, based on extent of damage, the level of accessibility and how many additional adjusters should be deployed. A pre-surveillance of the affected area can be fed back to carriers, thereby providing them with a preliminary report and recommendations on the appropriate course of action given the number and extent of insured policies they have within the affected area(s).

As an aid to the catastrophe adjuster doing site inspection, UAVs can take aerial high-resolution pictures of the loss site, helping the adjuster determine scope of damage and preliminary estimates.

The technology can also make the inspection process far safer and more efficient. For example, rather than having someone climb a roof to assess potential, a UAV can be flown over the loss site and collect the necessary information.

With the assistance of UAVs, loss reports can be generated more quickly and submitted electronically to carriers.

The instant access to site inspections, scope of loss reports and other pertinent details assists with determining coverage and estimating damages promptly and communicating that information to the insured.

Customer service

Faster claims adjustment will promote greater workflow efficiency and reduced costs, an important concern for carriers. Insureds who receive superior customer service through prompt claims resolution have been shown to have higher satisfaction ratings from insureds, something that may boost retention rates for brokers and insurers alike.

With advantages like ease of accessibility, efficient capturing and transmission of pertinent data, reduction in claims cycle time leading to cost savings, and an increase in insureds’ satisfaction, why is there little mention of UAV use in the claims-handling cycle?

The answer to that question may lie, in part, in Canada’s current regulatory framework for the commercial use of UAVs in a loss scenario.

LEGISLATIVE FRAMEWORK

As unmanned air vehicles are considered to be an “aircraft,” they fall under the regulations of the federal Aeronautics Act. The federal government, through Transport Canada, has primary jurisdiction over the regulation of UAVs in Canada, with responsibility for approving Special Flight Operations Certificates (SFOCs) assigned to inspectors in the regional and national offices, including the responsibility to declare the conditions to be contained in the certificates.

Section 602.41 of the Canadian Aviation Regulations notes that no person shall operate a UAV in flight except in accordance with an SFOC or an air operator certificate.

Organizations may qualify for an exemption, but these exemptions include only UAVs weighing less than two kilograms, and UAVs weighing between two and 25 kilograms.

Among the conditions of the exemption are that UAVs can only be operated at least five nautical miles from a built-up area, which essentially includes any town, village or group of houses/buildings. Also, the pilot shall operate a UAV at a lateral distance of at least 100 feet from any building, structure, vehicle, vessel or animal not associated with the operation, and at least 100 feet from any person.

In the event that an organization is unable to meet the conditions in the UAV exemptions, or if the UAV weighs more than 25 kilograms, it is necessary to apply for an SFOC. A separate SFOC must be obtained for each flight operation.

A successful application resulting in the issuance of the SFOC document effectively and clearly defines the parameters within which the operation may be performed. The typical application entails a detailed description of the operation, UAV and related flight/control systems, flight location and dates/times, operating personnel and their experience and roles, and operational and emergency procedures.

INCORPORATING UAVS INTO BUSINESS PRACTICES

The advancement of drone technology within the insurance industry and claims-handling practice will evolve as organizations develop a stronger understanding of the regulations governing the use of UAVs, and implement a business framework that is both effective and compliant.

This continues to be a challenge within the insurance industry, but there are certain key components to take into account to overcome the legislative hurdles associated with the commercial operation of UAVs.

First and foremost, it is necessary to have a qualified professional operating the UAV. Although UAV operators do not need to be licensed fixed or rotary wing pilots, they must have adequate knowledge and training of UAV operations, achievable by enrolling in a commercial

UAV operator school or program in Canada or through self-learning.

Transport Canada also stipulates that the operator be at least 18 years of age, cannot be impaired by drugs or alcohol, must be within line-of-sight of the UAV being operated, must be medically fit to operate a UAV, and must operate a UAV during daylight hours.

Accounting for the human factor and adopting safe operational procedures is a critical component to any UAV strategy. Operators need to be knowledgeable of, and steer clear of, restricted flight areas as specified by Transport Canada.

The maintenance of pre-flight checklists, logbooks and standard operating procedures serve as part of a well-defined safety management system and an organization’s overall framework for implementing a UAV within its business practice.

In addition, with the capabilities of UAVs to take high-resolution images and video record footage, organizations and UAV operators need to be mindful and respectful of others. Commercial UAV operators must maintain a safe distance from people, obtain permission before entering private property and exercise caution when capturing images and data, as well as recording conversations.

The progression and advancement of drone technology within the insurance industry and claims scenarios are reliant on an organization’s ability to grasp a strong understanding of the legislative requirements and implement a UAV business model that overcomes and addresses key legislative challenges.