Utilization of Aerial Imagery in Insurance: Trends and Regulations

Insurance companies are increasingly integrating aerial imagery in their processes for underwriting, inspection, rating, and catastrophe risk assessment. As this technology becomes more prevalent, insurers face the need for greater transparency and accountability. Regulatory compliance requirements are likely to demand clear guidelines on its use, and policyholders may express concerns over privacy and the depth of information derived solely from aerial views. State Farm, for instance, utilizes fixed-wing aircraft to capture images after a disaster, ensuring these images complement but do not replace ground inspections. Jeff Legner, vice president of property and casualty claims at State Farm, clarified that inspections are conducted regardless of aerial imagery, and no claims are denied based solely on such images. The use of aerial photos allows for rapid damage assessment, facilitating quicker claims processing and support during stressful times. According to Craig Isaacs, vice president of actuarial and underwriting modeling at State Farm, aerial imagery assists in providing a complete view of properties for underwriting purposes. This includes evaluating property boundaries, roof conditions, and other factors affecting risk, ultimately helping align policy pricing with actual risk. Regulatory Considerations and Compliance The National Council of Insurance Legislators (NCOIL) is reviewing policies related to aerial imagery with its Model Act Regarding Insurers' Use of Aerial Images. Different states have varying requirements; for example, Pennsylvania mandates both aerial and physical property inspections, while California is contemplating a ban on the use of aerial imagery in decision-making. The Role of AI and Data Transparency Kumar Dhuvur, co-founder and chief product officer at ZestyAI, emphasized the need for transparency and explainability in using third-party data, including aerial imagery, as part of insurance underwriting and rating processes. This reflects a broader trend in the industry towards clearer regulatory compliance and accountability. The National Association of Insurance Commissioners (NAIC) is examining the role of artificial intelligence (AI) in selecting and applying aerial images within insurance coverage decisions. Near Space Labs' co-founder and CEO, Rema Matevosyan, stressed the value of transparency in fostering trust between insurers and policyholders, advocating for decisions based on accurate, current data rather than outdated assumptions. This ongoing conversation around aerial imagery underscores the industry's shift towards digital tools, addressing both operational efficiency and customer trust. As insurance companies continue to explore AI and other technologies, they must navigate privacy concerns and regulatory frameworks to effectively meet both business goals and policyholder needs.