Insurance Companies Can Use Drones To Evaluate Your Next Claim

The commercial use of drones is moving toward prevalence as insurance companies put them into practice.

It is currently illegal in the United States to fly unmanned aircraft systems - commonly referred to as drones - for commercial use. However, in 2012 the Federal Aviation Association Modernization and Reform Act enabled the Secretary of Transportation to grant exemptions to approved companies that requested to use them. The first was granted last September and as of publication, 159 exemptions have been given to companies interested in using drones for agriculture, motion pictures, surveying and other operations.

While Amazon garnered the most media and consumer attention after announcing its goal of bringing drone delivery services to customers, one of the world’s largest industries has been positioning itself for years to take advantage of robotic flight: insurance.

Using Drones for Research & Development at USAA

USAA, an insurer with more than 10 million members, was granted two different exemptions earlier this month. The company has been researching and developing drone technology since 2010.

Kathleen Swain, USAA’s Innovation Advisor and a licensed FAA commercial pilot, said five years ago the drone community was not fully developed for the commercial market, so companies began high-level independent research. The insurer partnered with PrecisionHawk, a drone manufacturer in North Carolina, and utilized the technology whenever possible within the narrow guidelines and laws that apply to unmanned aircraft systems in the United States.

More recently, USAA used drones in conjunction with Texas A&M University’s Roboticists Without Borders to survey Oso, Wash. after a mudslide consumed a nearby rural neighborhood in 2014. The company also continued its own independent testing until it received the exemptions, expanding the breadth of its drone program.

The first exemption granted April 2 allows USAA to “operate an unmanned aircraft system (UAS) to conduct research and development” within specific guidelines. The PrecisionHawk Lancaster drone (the aircraft stated in the exemption request) is the only drone the company is permitted to use at this time. The drone has a 4-foot wingspan, weighs 41 pounds and looks like a small propeller plane. It’s stored inside a carrying case small enough to be checked onto commercial airliners. 

The Lancaster can be ready to fly in five minutes and does not require a license to operate, PrecisionHawk spokesperson Lia Reich said. The operator gives the Lancaster a toss, the drone flies a preprogrammed route, collects data, and lands safely. 

Drone Imagery & Data to be Used for Claims in Catastrophes

That ease and mobility means plenty of opportunities for testing, and Swain said catastrophe situations are the perfect entry point for USAA into commercial drones based on the need. 

“We’re looking to utilize that imagery and data in our claims process after disasters, not only to be safer, so there aren’t so many feet on the ground after a disaster, but also more efficient for our membership,” Swain said.

USAA’s second exemption granted April 8 permits to do that. In the event of a situation where the volume of claims to USAA from a specific area might be high, the company can send a PrecisionHawk Lancaster drone to collect images and data.

USAA has not deployed a drone to a catastrophe area since the company’s exemption was granted but that’s not to say it can’t happen soon. Swain doesn't know when the first deployment will be - that is at the discretion of USAA’s drone research and development team and dependent on a number of factors. Whether or not a drone would be appropriate to use, the air space, the size of a storm, and where a catastrophe or disaster occurs are some of those determinants. 

StateFarm, AIG, and Erie Insurance also have been granted exemptions allowing the testing or use of drones commercially and many others are interested.

Privacy Concerns & Other Questions

Lisa Ellman, Co-Chair of the Unmanned Aircraft Systems Practice Group at McKenna Long & Aldridge, said there were fewer than 10 clients when she joined in August. Now, the group has more than 100 clients, some being insurance companies. The firm filed the exemption requests granted to AIG and Erie Insurance on their behalf and has agreed to file an exemption on behalf of another, which Ellman could not name.

“The world is really just waking up to the potential of the use of drones in our country and that would include, of course, commercial operators and entities who want to be able to use drones and take advantage of drones for their own purposes,” she said.

Before joining the firm, Ellman was a Senior Counsel in the Justice Department where she led the Working Group on Domestic Use of UAS and represented the Department in policy-related issues shared by other departments and agencies. 

But even she has questions when it comes to commercial drone flights - which most people likely don’t know could be happening right above them.

“While the safety issues are very important, what the American public is actually very focused on is privacy,” Ellman said. “What happens if I’m an insurance company, or any company, operating a drone and I pick up images with my camera, what are we doing with those images? How long do we hold onto it? What if we see something?”

Those things are still unanswered because it’s hard for legislation to evolve at the pace of technology. But Ellman is optimistic.  

“As the technology improves, I think we will see the policymaking evolve in a way that is very exciting for the industry, including the insurance industry,” she said.

Other Commercial Applications of Drone Technology

Manufacturers are paying more attention to the broad scope of drone application as well.

Ryan Baker founded Houston-based drone manufacturer Arch Aerial to cater to archeologists, then realized other industries were interested in drones such as construction, oil and gas, agriculture and insurance. The company was granted an exemption by the FAA April 8.

“There are some applications that are five years out - they should have been five years ago,” Baker said. “There are a number of different ways these things can save adjusters money and the insurance companies as well.”

His company does not currently have any insurers as clients but Baker said they are communicating with insurance companies and working to be part of the industry. 

Joel Roberson, an attorney at Holland & Knight in Washington D.C., said the increasing interest in drones is not surprising, giving the progress companies have have made so far and the pending decision by the FAA.

The comment period following the Small UAS Notice of Proposed Rulemaking ends April 24 and a decision by the FFA isn’t expected until late this year or sometime in 2016.

“I think that, from a corporate level, folks are really looking at this more as a reality. Even if it’s not yet easy today, it’s still doable and as you look forward to the Small UAS rulemaking, that’s really not a long way off when you think in terms of corporate strategy and planning.”

Image credit: PrecisionHawk

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