Look, Up in the Sky . . .
Michael P. Voelker | May 23, 2016
Aerial imagery has proven its worth in claims and underwriting as a way to achieve better results in the inspection process. GuideOne Insurance, which specializes in coverage for churches and nonprofit organizations, has been using aerial inspections from EagleView and Pictometry since 2013.
“We initially elected to use EagleView image data to eliminate the time our field adjusters were spending on a roof doing measurements, and it has certainly accomplished that,” says Troy Spoonemore, director of claims development at GuideOne. “It can take 20 to 30 minutes to measure a roof manually. Multiply that by dozens of inspections that need to be made during a catastrophe, and the time savings really add up.”
Perhaps more important, using aerial imagery has safety benefits as well.
“Any time a claims adjuster climbs onto a roof, there’s a risk of injury,” Spoonemore says. “Our adjusters will still inspect a property to validate damage, but not having to climb around on a roof to take measurements and obtain other visual information reduces that risk.”
Rise of the Drones
Aerial imagery continues to evolve with advances in technology. “We have been watching the emergence of a multi-platform approach to imagery and property inspections,” says Jeff Haner, research director at Gartner. “Currently, it’s common for there to be a mix of satellite and manned aircraft imagery. Now, we are seeing drones added to the equation, which is definitely improving the range of capabilities available to an insurer.”
The added benefit of drones over traditional aerial imagery is that insurers can direct the image-capture process in real time. Additionally, drones provide a greater level of detail.
“You can get fantastic camera resolution from a plane, more than adequate for measurements, valuation, or general property condition. However, high-altitude imagery isn’t good enough for fine detail on damage. You might see that shingles are missing, but you can’t see if there are holes or cracks in shingles. Drones get you that micro-imagery data—they get you down to the sub-centimeter level,” says Antony Parchment, vice president of drone product strategy at EagleView.
Drones offer a wide and growing amount of data. Although most current usage is limited to still pictures and video, an array of specialized sensors is likely to come on line as drone technology evolves. Gartner’s Gerald Van Hoy reports that moisture meters, volatile organic compound detectors, photoionization sensors, voltage sensors, and ultrasonic tomographic velocimeters for deep structural data analysis are all features that may be available via drones in the not-so-distant future.
“Most of those sensors are already in use by building inspectors as handheld devices but haven’t yet been put on drones or mobile robots,” says Van Hoy, senior research analyst. “These devices can check buildings from top to bottom very quickly and pick up stress cracks, micro-fractures, and other things that the human eye can’t see.”
Not So Fast
Currently, the government is standing in the way of rapid, widespread adoption of drones. “The hurdles from what I’ve seen are not on the technology side. The biggest challenge is regulatory,” Haner says.
The Federal Aviation Administration (FAA) currently requires businesses to obtain an exemption under section 333 of the FAA Modernization and Reform Act of 2012 in order to fly drones commercially. Even when an exemption is granted, the FAA still requires that commercial drone use follow many of the same rules that apply to regular aircraft. This includes obtaining an aircraft hull number, preparing flight plans, obeying airspace restrictions and maximum flight altitudes, and having a fully licensed pilot operate the craft under the eye of a second observer.
“The combination of a need for exemption from the FAA and restrictions on how close the drone can get to people or other properties makes it difficult to put a drone in the sky,” Haner says. “The other challenge for insurers is that it’s not just federal requirements they are dealing with, but also restrictions at the state and community level. It becomes a patchwork of regulations.”
However, this is changing, at least on the federal level. The FAA, pressured by both businesses and lawmakers, has expressed a desire to fast-track further modernization of regulations around commercial use of drones.
“Federal regulations will likely evolve and diminish to the point where commercial drone applications will be much easier to do, particularly when you are using a device on private property. There are still key questions to be decided, such as how much leeway is going to be given for drones to operate over populated areas,” says Haner.
As evidence of a momentum toward regulatory change, the FAA announced in February the formation of an industry advisory panel to help draft rules for a new category of drones, likely defined as low-weight devices that fly at slow speeds, which would face fewer restrictions regarding flight in public places. The FAA expects to have a recommended framework by early April.
However, insurers aren’t waiting on the FAA. Several companies have created pilot programs (pardon the pun) for the use of drones. At the end of 2015, ACUITY received its section 333 exemption from the FAA, culminating a two-year process.
“Although we do expect there to be some relaxation of regulations, we wanted to go through the approval process to develop experience with the technology. We are developing our fleet in the anticipation that, one day, every one of our field claims representatives and loss control staff will have access to this technology to benefit our agents and customers,” says Ben Salzmann, ACUITY president and CEO.
The property-casualty insurer anticipates that it will begin using drones in the claims handling process.
“We intend to leverage their use in inaccessible loss scenes, to inspect steep roofs, or in other applications requiring imagery where physical inspection by the adjuster would be difficult or impeded by the structure. Drones can also deliver a high degree of accuracy and provide additional data for use in adjusting a claim,” says Paul Georgescu, property loss specialist and ACUITY’s chief drone pilot.
Georgescu is currently operating a DJI Phantom III quadcopter, which delivers still and video imagery and features optical and ground-sensing technology, GPS-based flight routing, and a range of safety features including auto-land capability in low-battery conditions. Georgescu flies the unit using a handheld, two-stick controller that holds an iPhone or iPad to provide a real-time display of what the drone is seeing through its cameras.
The carrier is sensitive to public concerns about the use of drones. “We understand the issues around both privacy and safety. We are committed to being a good steward of the airspace and respecting those concerns while using this technology in a way that benefits our customers, agents, and employees,” says Salzmann.
The insurer has several drones in its fleet and has identified two additional pilots among its current claims staff. Eventually, ACUITY hopes to expand its drone program to other areas of its operations, such as underwriting and loss control.
“Our initial focus is image acquisition in different processes. There is also a tremendous amount of software and sensors that are being developed for drones, and we are looking at how those add-ons will work for us, such as thermal sensors for heat mapping,” says Georgescu.
The challenge to expanding a drone program is that, even when a company receives an exemption from the FAA, limits still apply. For instance, ACUITY is restricted to flying only drones specified in its permit. When the insurer recently wanted to experiment with a different drone model, the company had to file an amendment, which is still being processed by the FAA.
For companies that want drone capabilities but don’t want to undergo the FAA approval process or maintain their own fleet, outsourcing is an option.
While drone usage is in the early stage of exploration and generally is being studied by large carriers, small carriers are already beginning to think through how they can gain drone capabilities in an affordable manner.
“We are seeing startups coming in this area that are offering drone services so that a carrier won’t have to create all of this on its own in order to get additional capabilities and functionality,” says Karlyn T. Carnahan, research director, Celent.
“We are looking at outsourcing as a complement to the overall drone program; for instance, utilizing larger fixed-wing drones to canvass a large catastrophe-impacted area. Additionally, we may use outsourced options to expand the use of drones across our operating territory while we build out our fleet,” says Melissa Winter, staff claims at ACUITY.
Aerial imagery providers are moving into drone technology as well. Antony Parchment was head of digital innovation research and development at Liberty Mutual before he left in 2015 to join EagleView and spearhead its drone program.
“At Liberty I was able to develop the business case around using this technology in insurance claims,” he says. “We could see all the efficiency and safety benefits. We also recognized that it could help avoid the adversarial relationship that can happen in a claim, where sometimes you have the insurer on one end, the contractor on the other, and the policyholder in the middle. Drone imagery makes the claim adjusting process more logical for the policyholder.”
EagleView has its FAA exemption, but it also contends with restrictions within that permit.
“We can go out with our carrier clients, fly the drone, and show them the results of inspections of properties that have damage. Unfortunately the regulations are very confining regarding what properties we can actually inspect. If you don’t have the permission of people within 500 feet of your operation, you aren’t able to operate. That’s what keeps this technology from being used broadly right now,” Parchment says.
The company also spearheaded the creation of the independent Property Drone Consortium, a collaboration among insurance carriers, construction industry leaders, and others that have agreed to work together to promote research, development, and the establishment of regulations for the use of drone technology across the insurance and construction industries.
A Clear View
Even without drone data, advances in aerial imagery are making a difference at insurers like GuideOne Insurance. A claim department reorganization in 2012 prompted the insurer to look for ways to leverage imagery to improve its processes.
“After the reorganization, we didn’t have the capacity to put a lot of field adjusters on the ground, so we needed to maximize their time out there, particularly during large storm events where we would deploy teams to damaged areas,” Spoonemore says.
EagleView produces 3D property models with detailed aerial roof and wall measurements. In 2013, the company merged with Pictometry, which provides aerial oblique image capture and analytical tools for assessment and visualization. Together, the tools provide detailed data and reports that the GuideOne claims staff use to measure and value roofs and structures that are damaged in storms.
The time saved by not having staff manually inspect a roof more than offsets the average EagleView-Pictometry inspection report cost of between $40 and $75. The savings are greater if adjusters can avoid contracting ladder assists, which can cost as much as $250 each. The imagery and reports also help improve outcomes and create consistency in claims.
“It’s not uncommon in roofing claims for there to be disputes over measurements. Roofers tend to overestimate; claims adjusters want to pay just what it takes to get it done. Because of the confidence created by the reports, we reduce those disputes and produce fair estimates. It’s hard to argue with the accuracy of the measurements. Using EagleView when we hire independent adjusters also saves time and cost and gives us consistency across different adjusting services,” Spoonemore says.
The challenge for companies is how to use the wealth of information that comes from imagery- and drone-based property inspections.
“Data presents some interesting challenges for carriers. The level of pixel size from these videos or photos may require significant storage capacity. Much of the data is unstructured in the form of videos or photos, so carriers will need to think about how to use this data effectively. They’ll want to track the metadata so it’s easy to find, and they’ll likely want the capability of indexing and tagging the video at certain points to identify specific data elements,” says Carnahan.
“Unless there is an investment in a modern claims, policy, or underwriting solution, I’m seeing that it is very easy for insurers to hit the wall in terms of how much data they can incorporate into their systems,” says Haner. “Data from drones or aerial imagery may technically be accessible by claims staff or underwriters, but without a modern system and integration, that access is often in a disconnected fashion where people have to go to different systems. The ultimate goal is to pull all data into an admin system and incorporate it into the day-to-day process of working a policy or claim.”
In 2014, GuideOne did a full integration of EagleView with the insurer’s Guidewire claims system and Symbility estimating platform.
“When a claim is reported that meets a certain criteria, such as being a hail or wind loss, it is automatically referred to EagleView. By the time our field adjusters make it to the loss location, they already have measurements loaded into the system for that claim. All the adjuster has to do is validate the damage to the structure on site,” Spoonemore says.
The Sky’s the Limit
Whether leveraging advances in traditional imagery or looking to the skies with drones, insurers are finding new ways to use aerial technology in claims, underwriting, loss control, and other areas of their operations.
“Going forward, drones offer a very interesting way of gaining unique information that can help a carrier improve their underwriting decisions, more quickly respond to claims, and handle claims more safely by adjusters,” says Carnahan. “We recommend carriers watch the leaders in the field, explore drones with small pilot programs, and begin to consider how the resulting data can be used going forward.”
“The quality of drone imagery that we’ve explored is amazing. It provides a level of detail that lets you determine hail damage to a roof versus non-hail damage and regular wear and tear. We definitely anticipate drones having applicability in our operations,” says Spoonemore, who sees overall technological evolution as a way to level the playing field.
“We’re a smaller carrier, about $650 million in written premium, and we realize that technology will be key to competing in the market,” he says. “We will continue to explore and partner with companies as they create new products to improve the claims process. We believe technology will be a true game-changer for us.”
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