Emerging Risk: Drones

Government Drones Are Everywhere and Risk Managers Better Catch Up

The use of drones in the public sector is expanding rapidly. From heat mapping to dispersing medication to investigating noise complaints, the benefits and the risks are tangible.
By: | June 1, 2018 • 9 min read

In the wee hours of a frigid February night in the village of Ludborough, Lincolnshire, England, a motorist flipped his car on an isolated road. Dazed, he wandered away from the scene and was spotted by a passerby who alerted authorities.


Local police deployed a drone equipped with thermal imaging to aid in the search. The drone found him within minutes, unconscious and hypothermic, at the bottom of a ditch he’d stumbled into. Officials acknowledged he might have died were it not for the quick action of the search team and their drone.

In the U.S., similar scenarios are unfolding across the country. In June 2017, two hikers and their dog got lost in Colorado’s Pike National Forest. Douglas County Search and Rescue dispatched a drone above the vast expanse of treetops and found the trio in less than two hours.

A few months later, local police using a drone took less than 30 minutes to locate an 81-year-old woman who’d become lost in a cornfield in Asheboro, North Carolina.

“I imagine that if Superstorm Sandy were to happen today, they’d be using [drones] a lot more to help find people that were still out there,” said Edward Cooney, VP, account executive and joint insurance fund (JIF) underwriting manager, Conner Strong & Buckelew.

But search-and-rescue is hardly the only application for unmanned aerial vehicles (UAVs) in the public sector. According to a recent study published by Bard College’s Center for the Study of the Drone, the adoption of UAVs by public safety agencies has been accelerating rapidly ever since the introduction of inexpensive consumer drones in 2014.

As of March 2017, nearly 350 police and fire departments in 43 states are using UAVs, for everything from crime scene photography to locating suspects and stolen property to conducting safety and risk assessments during active fires and locating people trapped inside burning buildings.

Drone applications outside of law enforcement and fire safety are growing as well. Cooney, whose organization runs two large municipal entity pools, said its member towns are either using UAVs or considering their use for a broad range of applications, including:

  • mass distribution of medications in the event of emergencies;
  • identifying and tracking oil spills and other hazardous material releases;
  • geotagging sewer pipes or boilers throughout townships;
  • forestry applications, such as monitoring wildlife and the depletion or overgrowth of forests;
  • heat-mapping facilities, such as utility authorities and waste utilities to watch for hotspots that could potentially cause fires;
  • recording noise levels to investigate civilian noise complaints;
  • remote water testing in areas that are difficult to access; and
  • bridge monitoring and assessment.

Fear of Overreach

The versatility of drones, their speed, efficiency and relatively low cost is prompting calls for expanded use. Following the mass shooting in Las Vegas, a terrorism expert spoke out about the need for drones to be deployed to assist police in gathering real-time intelligence during such incidents. The president of the Los Angeles Police Commission concurred, suggesting the shooter’s location might have been pinpointed faster had a drone been deployed.

A combination of federal and local laws, however, place certain limits on expansion. Public drone operators, like their private counterparts, are subject to Part 107 of the FAA’s Small UAVs Rule. Part 107 specifies where and when drones can be operated and the maximum speed and altitude of operation, among other things. It also specifically prohibits the use of drones at night or directly above people without a Special Governmental Interest waiver from the FAA.

“I imagine that if Superstorm Sandy were to happen today, they’d be using [drones] a lot more to help find people that were still out there.” — Edward Cooney, VP, account executive and joint insurance fund (JIF) underwriting manager, Conner Strong & Buckelew

Local laws governing public drone use often reflect public and political pressures in a region. Seattle’s police drone program was scrapped in 2013 after public outcry that the program would create a “surveillance state.” For similar reasons, the LAPD had no drone program prior to 2018, even though the Los Angeles Sheriff’s Department currently operates such a program.

Most agree that, used judiciously, drones can be a valuable tool to help protect law enforcement, firefighters and the public. “Mission creep” is the biggest concern of opponents, who argue that while the technology might be employed with good intentions initially, it’s inevitable that lines will be crossed, putting civil liberties in jeopardy. It’s a very small leap, for example, from drones equipped with cameras to drones equipped with sophisticated facial recognition technology.

While the privacy debate will likely continue to stir controversy across states and municipalities, it may pale in comparison to the next frontier: the weaponization of public drones. No U.S. public safety department currently utilizes weaponized drones. A Connecticut bill that would have criminalized weaponized drones, but left an exception for law enforcement, never got past committee.

Just five states — Nevada, North Carolina, Oregon, Vermont and Wisconsin — directly ban the use of weaponized drones.

In North Dakota, a bill intended to limit police use of drones took a curious turn due to an amendment proposed by a police lobbying group. The adopted amendment enables police drones to use “less than lethal” weapons, such as tasers, bean bags, pepper spray, sound cannons and rubber bullets. No departments in North Dakota are known to be currently using UAVs equipped with nonlethal weapons.

Coverage for Drone Risks

Public sector risk managers can best serve their entities by ensuring all pieces are in place for an effective drone program that serves the interests of its employees and citizens.


Agencies getting it right are the ones that approach it with the same amount of care as if they were buying a helicopter, said James Van Meter, drone expert and aviation practice leader with Allianz Global Corporate & Specialty. A drone employed in the interest of public safety “can provide great benefits, but it requires specialized training and licensing.

“There’s a lot of expertise involved in actually using this equipment to obtain the data or the images that you’re trying to obtain,” he said. “It requires special training, a special skillset and experience with it.”

Agencies should establish standard procedures for how to set the equipment up, how to check it, how to verify it’s safe before launch, how to operate it properly and safely over the areas it will be flown.

“Having the aviator mindset, as we like to call it, really makes all the difference,” said Van Meter.

Appropriate coverage is vital to protect the agency and the municipality. Van Meter said drone operators in the public sector typically buy hull and liability coverage and, in some cases, privacy coverage as well.

“Some risk managers view [privacy risk] differently, because privacy in the law enforcement context is very clearly covered and defined by the Fourth Amendment,” Van Meter explained.

“It’s a lot different for me, as a private citizen, if I’m capturing images that potentially could be violating someone’s privacy versus a law enforcement agency flying their helicopter over someone’s backyard to see what’s growing back there,” he said.

In fact, two cases in the late 1980s specifically addressed whether police were in violation of the Fourth Amendment when—without a warrant— they used drones to identify marijuana plants being grown on private property. The courts found in favor of the police in both cases. In one of the cases, the court concluded a warrant wasn’t necessary when capturing images easily visible to the naked eye from 1,000 ft.

However, current imaging systems are more advanced than they were 30 years ago, so the naked-eye holding might not stand today. In addition, U.S. courts have not clearly defined where private property ends and public airspace begins, so a drone flying at 500 ft. might net a different verdict.

Cyber Concerns

As with any other connected device, cyber security is a concern. The two key cyber concerns related to drones fall into different buckets with regard to coverage.

A breach of the data obtained by a drone would require the same type of coverage as any other breach, said Van Meter. If a drone captures sensitive data on a suspect, a crime scene or people who’ve been injured or killed, a bad actor could conceivably hack the agency’s database and post those images on the internet.

That scenario would fall outside of an aviation policy but should be covered by the agency’s cyber policy. A cyberattack with physical damage to the drone is a different matter, said Van Meter.

“An attack on the drone itself, what’s called spoofing, is where someone hostilely is trying to either jam the signal so that the drone crashes, or potentially take over control of the drone,” he said. “Both of those scenarios would be covered under war coverage on our policy, because that is [considered] a hostile takeover or hijacking of the aircraft.”

War coverage also applies to non-cyberattacks, such as when a suspect shoots at a drone and causes damage.

James Van Meter, drone expert and aviation practice leader, Allianz Global Corporate & Specialty

The increase in public sector uptake of drones has been explosive. According to the Bard College study, usage by police, sheriffs, fire departments and other municipal agencies grew by 518 percent within the two years prior to the study’s release.

Risk vs. Reward

Most of the risks posed by drones are not new, noted Cooney. Bodily injury and property damage are risks public entities already manage. Privacy invasion claims also are a well-understood risk, particularly for public entities that employ video cameras or body cams.

Still, transparency is a solid mitigation strategy for agencies or municipalities operating UAVs, said Mark Aitken, senior policy advisor with Akin Gump and a former director of government relations at the Association for Unmanned Vehicle Systems International.

“Someone sees a drone, and they’re in their backyard sunbathing — they think their picture’s being taken,” said Aitken.

Education and outreach efforts are needed to help citizens understand what purpose the UAVs are actually serving, he said.

“If they were to hold [some kind of] workshop and say, ‘Hey, you might see these things around — here’s what we’re using them for,’ I think that that can go a long way. It takes the guessing game out of the equation where people automatically assume [that it’s] not being used in the right manner.”


The FAA’s website hosts a wealth of information and guidelines. Each entity must then “consider what are their own tolerances and thresholds for perhaps going above and beyond what the FAA has put in place,” Aitken said.

Well-designed policies and procedures — developed in-house or with the help of a safety management organization — help organizations ensure a level of professionalism with their drone operations and pilots.

“While there are certain risks inherent in the use of drones,” said Cooney, “it’s important to understand all of the risks that it could be offsetting. We’re trying to balance that risk and reward. That’s why we went into offering coverage for all of our members, because we think that there’s a lot of benefit from a safety perspective that they can offer.”

Added Van Meter: “It just makes so much sense to equip law enforcement officers with this technology. It can help … save innocent people, but also protect law enforcement officers and firefighters.

“The more knowledge they have of what they’re about to walk into, the more knowledge they have about the situation that they’re encountering, the better decisions they can make and the better they can act to protect themselves and the general public.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.


Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”


Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.


“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]