Presentation on theme: "Drones – Insurance Implications"— Presentation transcript:
1 Drones – Insurance Implications March 12, 2015 – PAMIC – Nittany Lion Inn[click for next slide]
2 Agenda Part One Overview Reported and Potential Uses Potential Exposures and Coverage IssuesISO ActivityEndorsement OptionsRating Considerations
3 Drones as an Emerging Issues “By failing to prepare, you are preparingto fail.”Benjamin Franklin
4 Drones as an Emerging Issues What is an emerging issue:New phenomenon: nature and effects are relatively unknownE.g., nanotechnologyNew risk: nature and effects are relatively known but involve unique characteristicsE.g., hydraulic fracturingPotential Impact:May go beyond existing underwriting and risk management best practicesMay go beyond existing actuarial calculations
6 What Are Drones The FAA Modernization and Reform Act of 2012 defines: Unmanned Aircraft System (UAS) - an unmanned aircraft and associated elements (including communication links and the components that control the unmanned aircraft) that are required for the pilot in command to operate safely and efficiently in the national airspace systemUnmanned Aircraft (UA) - an aircraft that is operated without a possibility of direct human intervention from within or on the aircraft
7 Technology And Design Types Flight Features Navigation Fixed wing Quad rotors and octo-coptersMicro air vehicles (MAVs)Flight FeaturesMini: low altitude, short durationTactical: low to medium altitude, up to several hours, line-of-sightStrategic: medium to high altitude, hours to days, long- rangeNavigationRemote control ground stationAutomation systemsSatellite data linkSource:Source:
8 Drones – Reported & Potential Uses “We’re not talking Internet retail giants anymore”
9 Reported And Potential Uses MilitaryIntelligence gatheringCombat missionsLaw Enforcement And Security SurveillanceCrime investigationBorder protectionSecurity of commercial propertiesNeighborhood watchSource:
10 Reported And Potential Uses Search And Rescue OperationsSearch and rescueDelivery of supplies and food to disaster areasAgricultureMonitor cropsLocate livestock and assess available forageCrop sprayingSource:Source: https://www.faa.gov/about/office_org/field_offices/fsdo/orl/local_more/media/fy14summit/145SafetySummit_NextGenOverview_3_20_14.pdf
11 Reported And Potential Uses CommunicationsMovie filmingSporting eventsDeliveryPackaged goods and other mailPhotographyReal-estateWeddingsInspectionInsurance claims evaluationInfrastructure evaluation (e.g. bridges and dams)Underwriting inspections (e.g. roof)
12 Drones – Potential Exposures & Coverage Issues “Just to name a few”
13 Potential Exposures - Liability Bodily Injury And Property Damage LiabilityPotential defect in design or manufactureCollision with persons or propertyInterruption in data-link transmission communication failurePersonal injuryInvasion of privacyTrespass and nuisanceInfringement and defamation
14 Potential Coverage Issues - Liability Provisions expressly addressing aircraft under the ISO CGL today?Coverage AAn exclusion with respect to the ownership, maintenance, use or entrustment to others of aircraftSome limited exceptions may applyCoverage BNo exclusion expressly addresses aircraft
15 Potential Exposures - Property Property ExposuresFirst-party property damagePerils of aircraft and falling objectsBusiness interruption lossesHacking
16 Potential Coverage Issues - Property Property Coverage IssuesUnder the ISO Standard Commercial Property Policy:Property not covered provisions address aircraft as property not covered if operated principally away from the described premises as well as personal property “while airborne”Specific provisions exist with respect to loss caused by physical contact of an aircraft; including caused by objects falling from an aircraftBusiness InterruptionWith respect to direct physical loss to covered drone(s), “period of restoration”?Are the “operations” new to the risk?
17 Potential Exposures and Coverage Issues What About Other Lines of Business?Homeowners?Businessowners?Farm?Cyber?Workers Compensation?
18 Drones – ISO Activity “Endorsement options and rating considerations”
19 New ISO Liability Exclusion Endorsements Optional exclusion endorsements – ISO GLCoverage A onlyDelineates existing aircraft-related exclusionCoverage B onlyIntroduces exclusion addressing Unmanned AircraftCoverage A and BCombines aspects of Coverage A and B options
20 New ISO Liability Exclusion Endorsements Optional coverage endorsements – ISO GLCoverage A onlyDelineates existing aircraft-related exclusionAdds schedule to designate:Drones for which the exclusion will not applyThe types of projects or operations the above exception will be limited toAn optional designated aggregate (sub- limit) when coverage will apply
21 New ISO Liability Exclusion Endorsements Optional coverage endorsements – ISO GL (Continued)Coverage B onlyIntroduces exclusion addressing Unmanned AircraftAdds schedule to designate:Drones for which the exclusion will not applyThe types of projects or operations the above exception will be limited toAn optional designated aggregate (sub- limit) when coverage will apply
22 New ISO Liability Exclusion Endorsements Optional coverage endorsements - ISO GL (Continued)Coverage A and BCombines aspects of Coverage A and Coverage B only endorsementsOptional designated aggregate applicable to both coverages A and BSimilar options were also introduced for use with the ISO Commercial Liability Umbrella Program (sans the designated aggregate limit options)
23 Drone Rating Considerations – Liability Limited Data on Non-military Drone LossesCrashesBodily InjuryProperty DamageWill all crashes yield one or the other -- or both?LocationRuralUrbanDrone CharacteristicsSizeCapabilities and Operations (photography, spraying, payload capabilities)
24 ISO Drone Activity Filed GL/CU/CX endorsements end of 2014 To become effective 6/1/2015Reviewing topic for following LOBsCommercial PropertyBusinessownersFarmCommercial Inland Marine
26 Commercial Casualty Product Development Contact InformationWilliam “Billy” MauroDirectorCommercial Casualty Product DevelopmentISONo part of this presentation may be copied or redistributed without the prior written consent of ISO. This material was used exclusively as an exhibit to an oral presentation. It may not be, nor should it be relied upon as reflecting, a complete record of the discussion.
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