Insurers Adopt Wait-And-See Attitude Toward Drones

When high winds send a tree limb crashing into a roof, the only way someone can document the damage is to climb a ladder in potentially treacherous conditions and snap some photos.

But imagine an aerial drone taking on the job, outfitted with multispectral cameras. The craft could not only lessen the safety risk during a storm, but also take photos at anytime looking for nonvisible signs that show whether a roof is stressed. The photographs could form part of an "intelligent" image system that would allow an insurance company to note changes in a property over time or run risk analyses based on what-if scenarios, said Charles Mondello, president of the Property Drone Consortium, a drone research organization.

The Federal Aviation Administration gave Consortium permission in June to fly drones on behalf of Allstate Corp. and others for research into their potential for assessing property claims. State Farm Mutual Automobile Insurance Co. and American International Group Inc. have already won similar permission.

Industry experts agreed that drones could benefit the insurance industry. But while bigger insurers take to the sides, some local companies said they were not yet willing to experiment with the unmanned craft.

Upsides

People who suffer property damage want their claims quickly examined, and drones could speed up the process when there is a flood, hurricane or other widespread, catastrophic event, said Jonathan Greer, vice president of the Insurance Federation of Pennsylvania.

Insurance brokers could also use drones to inspect buildings that are small or in remote locations rather than send a person to the scene, said Tod Bergen, a business insurance executive for Springettsbury Township-based McConkey Insurance & Benefits.

Scott Lutz, vice president of claims for Lititz Mutual Insurance Co., said drones could be particularly useful in the initial examination of a property to determine if an insurer wants to underwrite it. The vehicles could also be used to verify any photos submitted by clients.

"Wait-and-see"

Still, Lutz is skeptical that drones will be effective tools in other cases, such as documenting evidence related to claims of property damage.

"I'm just not sure, at the end of the day, that a jury is going to believe a robot," he said.

In any case, researching drones represents a large enough investment better suited to heavyweights like Allstate and State Farm, he said.

"They can afford to make mistakes. We can't," he said.

Bergen said drones would have to confer a very significant advantage before he would consider them, given the cost, liability, employee training, and documentation involved in their use.

Insurance brokers also see the potential downside of drones, he said. If a client business used a drone and was involved in an incident, it is uncertain how the legal and regulatory issues would be resolved.

Most of Pennsylvania's smaller insurers are adopting a similar "wait- and-see" approach, Greer said. Before launching drones, they will likely want evidence that the craft can improve efficiency or safety without sacrificing accuracy.

Countdown to liftoff?

Mondello is confident that the use of drones by insurers will eventually become commonplace, but he admitted that research is needed first. Companies still must learn how to use them and how to fold them into their workflows, and the FAA needs to become confident that they can be used safely.

Federal restrictions are currently creating a headwind for the industry, said Tom McMahon, vice president of advocacy and public affairs for the Association for Unmanned Vehicle Systems International. The FAA does not permit the flying of drones without a special exemption and is issuing about 50 exemptions per week, not enough to meet demand. The FAA may begin permitting drones without exemption by summer 2016.

Even with approval, operators are forbidden from flying craft over 400 feet above ground level, within 5 miles of an airport, or over regions with a dense population or facing temporary flight restrictions, McMahon said. *

Other uses for drones

Over the next decade, drones will spur creation of more than 100,000 jobs and have an economic impact of $82 billion, according to the Association for Unmanned Vehicle Systems International.

Here are some other industries that Tom McMahon, the association's vice president of advocacy and public affairs, said have earned approval from the Federal Aviation Administration to research use of drones:

Agriculture: Drones provide a more efficient option for surveying land. Some companies in Japan and California are already using them for precision spraying of fertilizer on crops.

Real estate: Photographs taken by drones offer aerial views of properties and surrounding land, which can be published by real estate agencies.

Construction: The Industry would benefit from images of an entire building while it Is being constructed - exactly the type of aerial photograph a drone could provide.

Utilities: Drones could determine the condition of electric, gas or telephone lines after a storm or other weather event, reducing the risks to line Inspectors.

BY DANIEL WALMER

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