1. technology and computing

BEST’S REVIEW
Eyes in
The Sky
Tech Challenge: Drone Technology
www.bestreview.com
May 2015
Drone technology
is expected to
transform claims
adjusting.
by Kate Smith
NEW CLAIMS TOOL: The USAA Unmanned
Aircraft Systems team, left to right, Chuck
Oakes, Erin Martinko, Tony Farnsworth, Kat
Swain, Mike Allen and Jess Gingrich, poses with
a drone they intend to use for assessing claims.
K
at Swain never cared much for climbing
insurance claims adjusting and postKey Points
onto roofs. Climbing into cockpits,
catastrophe response.
however, was a different story.
“We believe drones hold potential for
The Technology: Drones
are expected to be the
Hooked on flying since she was 16, Swain
commercial and personal lines carriers by
hottest new technology in
was a commercial pilot and flight instructor
being an extra set of eyes in the sky,” said
claims handling.
before joining the claims department of the
Agil Francis, director-consulting/principal
The Pros: They will
United Services Automobile Association—
with Cognizant Business Consulting’s
improve safety, increase
the USAA—15 years ago. Now the former
Insurance Practice.
accessibility and improve
claims adjuster and certified pilot is marrying
“Equipped with new capabilities such
efficiency.
her aviation background with her claims
as integrated audio and text with realbackground as a drone pilot—to date, the only The Cons: Training,
time video feeds and the ability to overlay
privacy and professional
drone pilot—for USAA.
images over existing footage through
liability are concerns.
“Prior to getting involved in innovation
augmented reality, next-generation drones
and our drone research, I was in claims for
could have significant commercial value for
all of my prior years here,” said Swain, whose
businesses across industry segments.”
official title at USAA is innovation adviser.“So I’ve been
This emerging technology is set to be a game-changer
able to bring all that experience over and share it with my for claims handling, and the insurance industry is ready to
research and development team.
embrace it.
“I have the best job in the world,” she added.“I get to
“Drones, without a doubt, are going to have the biggest
test out all the new technologies and see the benefits of
impact of all the new technologies,” said Peter Fennell,
what they can provide.”
managing director, claims and accounting, for Aon Benfield
With drones, the benefits are expected to be extensive. and president of the International Association of Claims
Experts predict unmanned aircraft systems will transform Professionals.“Imagine having drones available when
1
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you’ve had a tsunami like the one in Japan, or
“As far as how this technology can assist
when you’ve had a nuclear reactor meltdown,
claims, I kind of look at this technology from
or when you have a situation that’s so
a two-pronged approach: It can improve
dangerous that you can’t send a human being
safety for people out in the field and it can
into it.That’s going to be quite a tool.”
make the process more efficient,” Swain said.
Drones aren’t quite ready to take off
“For instance, at a disaster event, it can be an
just yet.Though the Federal Aviation
issue inspecting structures after a disaster;
Administration has allowed limited use
even getting into the area can be challenging
of unmanned aircraft systems since 1990
after a disaster such as a hurricane or a
for “important public missions such as
tornado. So this technology can make it a
firefighting, disaster relief, search and rescue,
lot safer for the individual adjuster, because
law enforcement, border patrol, scientific
we can get that aerial imagery from above.
“Drones, without So the person doesn’t need to immediately
research, and testing and evaluation,” the
agency only began approving drones for
go into those damaged areas, and we can
a doubt, are
commercial use in the past year.
still get that information back to our internal
going to have
Entities looking to use unmanned aircraft
adjusters quickly.
the biggest
systems for non-recreational purposes
“That dovetails into the other part—the
impact of
must apply for an exemption. As of April 1,
‘quickly’ part, the efficiency part,” she said.
all the new
the agency had received more than 800
“We can get this information a lot more
technologies.”
exemption petitions and had granted fewer
efficiently than we could if we had to wait to
than 70. USAA, State Farm, AIG, Liberty
Peter Fennell, get into these areas once they’re cleared.We
Mutual,Travelers and Erie Insurance are
Aon Benfield can send that aerial imagery a lot quicker to
among the insurers who have sought
the inside adjuster than if we were writing
exemptions, according to FAA filings.
up traditional estimates.”
In February, State Farm became the first insurer granted
One of the big issues for property catastrophe
an exemption, with USAA and AIG following suit in April.
adjusters is inaccessibility to their insured properties.
Experts say more insurers are likely to implement
Depending on the severity of the catastrophe, simply
this technology once federal regulations for them are
finding the property among the rubble can be difficult.
established. In February, the FAA and the Department of
“Drones will have a definite impact on the ability to
Transportation proposed a regulatory framework that
access the damage and be able to locate, through GPS,
would allow use of certain small (less than 55 pounds)
insured properties,” Fennell said.“Even if it’s impossible
unmanned aircraft systems.
to locate an address on the ground due to catastrophic
“At Cognizant, we are seeing a lot of interest from
damage or access is denied by government authority,
P/C insurance carriers to develop prototype solutions
drones will still be able to do it through GPS, which is
using drones, as they clearly understand the benefits,”
going to be pretty fantastic.”
said Francis, who co-authored Cognizant’s white paper,
The speed at which drones can be deployed ultimately
Drones: The Insurance Industry’s Next Game-Changer?
will benefit policyholders, who could have faster
“Once regulations are firmed up and carriers start getting
resolutions to their claims.“In most scenarios, catastrophe
FAA approvals, we believe insurance adjusters will start
claims adjusters encounter a variety of safety hazards they
using drone technology in the not-too-distant future.”
must navigate to visually examine and evaluate losses,”
Francis said.“Drones can help reduce claims settlement
Unparalleled Access
time, thereby improving customer claims experience.”
The attraction of drones lies in the accessibility and
They also eliminate some of the riskier elements of
safety they provide, as well as the impact they could have
claims adjusting. For Swain, climbing a ladder to examine
on efficiency and productivity.
a roof always felt like a sticky situation.There was the
Projected Annual Sales of Unmanned Vehicles
2015
2016
2017
2018
2019
2020
40,000
70,000
105,000
110,000
118,000
125,000
Source: Association of Unmanned Vehicle Systems International
BEST’S REVIEW • MAY 2015 • REPRINT
2
Tech Challenge: Drone Technology
3
camera to carry, notebook to hang onto and footing to
kind of airspace.
watch.“I never liked that part of the job,” she said.
For claims purposes, a small unmanned aircraft
Drones will alter that aspect of the job.“Property claims
system would be typical, experts say. These devices can
adjusters typically encounter hazardous situations like
be programmed to fly specific patterns and they can be
climbing ladders and scaffoldings to access roof lines,
manually overridden and flown by a human, if necessary.
ice dams and chimneys,” Francis said.“Drones have the
Swain compared piloting USAA’s drone to flying a
potential to significantly change the way property adjusting radio-controlled airplane.“As a young person, I flew
is performed. Easy portability, navigation and the ability to
RC aircraft, which are similar to these,” she said.“I
take high-resolution videos and photos make drones the
went through formal training with the manufacturer,
ideal solution for supplementing claims adjudication, since
PrecisionHawk, but it was a very smooth transition.
adjusters would no longer need to climb dangerous ladders The actual flying and aerodynamic characteristics are
with a point-and-shoot camera in one hand. Drones could
very similar.The changes came with the technology; the
also enable adjusters to get very close to a roof, zoom in to
cameras, sensors and payloads are different.”
questionable areas and analyze details to understand the
Learning to use the technology takes time and
cause of loss, all without disturbing the scene.”
training. Until last month, Swain had to travel three
Using drones for aerial photos “takes a lot of the risk out hours to Texas A&M University in College Station, one
of the equation for the claim staff,” Fennell said.“From a risk of six testing sites nationwide established by the FAA, to
management standpoint, you have fewer injuries among
perform USAA’s testing. Since receiving an exemption,
your claim staff because they don’t have to do some of the
USAA has been able to perform testing on and near its
things that potentially could cause injury to them.”
headquarters in San Antonio.
Drones equipped with infrared cameras also can
“Now we’re able to fly here on our USAA campus
accurately detect air and water leaks.“The infrared
and on other unpopulated land sites around the area,”
technology lets you see where there’s underlying damage she said.“This allows us to work more efficiently
or water damage that maybe an adjuster couldn’t see
because we’re able to do our research and development
with his eyes,” Fennell said.
closer to home.”
An additional benefit, experts say, is that drone
At this point, training is a key issue and professional
technology could help reduce fraudulent claims. For
liability is a concern, Fennell said.“Luckily we haven’t
example, claims adjusters could use before and after
had any accidents with drones,” he said.“But when the
images of insured properties to quickly and accurately
first one comes around, people are going to question
assess damages in a catastrophe. In the case of back-towho’s operating these things and whether they have a
back storms, drones could be used to identify which
license to do it.The regulatory environment is behind
occurrence caused which damages.
the technology right now. Until that gets ironed out, it’s
Drones also could be useful in crop insurance, where
going to be an issue.”
adjusters need to inspect large areas in a short amount of
Fennell said adjusters also have some concerns about
time.“Drones allow you to take photographs of the entire outsourcing.“They could become a threat if adjusters
acreage and know what part exactly has been damaged.
cannot obtain licenses to operate them,” he said.“The
It also allows you to take photographs of it in the
requirements for a license may be such that only a
beginning before there’s any damage, so that you know
third-party vendor has the experience necessary.The
that there actually was a loss since that time,” Fennell said. adjuster will then only review the photographs and
Francis also saw potential benefits for crop lines.
films later on. If you’re not actually seeing it yourself or
“Drones can cover these distances quickly, provide highyou’re only seeing part of it, that makes it difficult to
precision images and transmit information
do an assessment.”
in real time to adjusters,” he said.“Also,
These issues, as well as privacy
instead of having specialist adjusters travel,
concerns, still need to be addressed. But
Learn More
certified local drone operators could
Francis says there are still more pros than
United Services
operate drones on-site, while the adjusters
cons with this technology.
Automobile Association
can view damages in real time remotely,
“Safety and privacy are the two key
A.M. Best Company # 000934
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thus improving productivity, reducing
concerns which need to be addressed,”
fraud, and reducing operational expenses.”
he said.“These can be addressed with
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Training Ground
procedures to obtain customer consent
Unmanned aircraft systems vary in size
and limiting the fly zone of the drones
Video:
and function, with wingspans “as large
to property and roof limits. Liability
Go to page 44
as a jet airliner or smaller than a radiocan be addressed with good training
of the digital
controlled model airplane,” according
and limiting fly zones.The benefits of
edition at
to the FAA.They can operate from the
using drones for claims adjudication and
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to watch a video
ground to more than 50,000 feet in the
risk engineering can far outweigh any
about this story.
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air, though most insurers won’t need that
potential drawbacks.”
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