Potential Effects of Drones on the Property Insurance Industry

Posted by: Agent Hub

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From military purposes to recreational use, drone technology is making waves in the 21st century and the insurance industry is taking notice. According to Claims Management, many insurance carriers and corporate risk managers have expressed an interest in the use of drone technology for property damage assessments. Much of this use would be in response to natural disasters such as tornadoes and hurricanes, as well as catastrophic events like oil spills and industrial explosions.

How Will Drones Impact the Insurance Industry?

Underwriting and Risk Assessments: Implementing drone technology has the potential to impact the insurance industry as a whole in significant ways. For example, underwriting and risk assessments — an area in which drones are already making an impact. Now, insurance agencies are utilizing the technology to assist property owners, risk managers and brokers. For industry professionals who are interested in performing risk surveys (think environmental site assessments, probable maximum loss assessments and the like), drone technology can seriously improve the efficiency of the processes.

Claims: Drones can help insurers better understand the scope of the damages accrued during catastrophic events. With the use of drones, insurers can inspect losses that may be difficult to access, such as sloping roofs and buildings damaged by fire.

Insureds: Insurance companies aren’t the only ones to gain access to this new technology. The insurance sector will need to begin assessing risks associated with the average user operating drones, such as negligence and recklessness, poor enforcement and privacy infringements.

What Are the Requirements for Insurers to Implement Drone Technology?

The Federal Aviation Administration (FAA) is in charge of regulating and approving use of drones for commercial use. All companies that want to use drones need to petition a Section 333 exemption and, once approved, are required to register all drones with the FAA. Companies are also required to follow several guidelines, which includes licensing pilots operating the drones, properly maintaining documents and notifications, and reporting to the FAA. The process involves a lot of preparation and effort, but done successfully, can provide great benefits to insurers.