New practical and consumer-facing applications for dronetechnology dominated the Consumer Electronics Show earlier thisyear with businesses and other large-scale organizations cashing inon the phenomenon.

Retail giants Amazon and Walmart have tested drones for homedelivery, media outlets have used drones to film aerial newssegments, and Spanish engineers have even developed dronetechnology with thermal vision that could be used to catch poachersin Africa.

However, another industry — one that doesn't quite have thereputation for employing cutting-edge technology — is effectivelyand efficiently using drones: the insurance industry.

As technology and digital engagement accelerate at anexponential pace in other industries, the insurance industry hasrecognized the incredible opportunity to invest in technologicaltrends like telematics, the Internet of Things and drones. Usingthese new technologies signifies an improved way to successfullycapture, store and cull data, which ensures better, more-targetedinsurance products for customers and reduction in futurelosses.

When it comes to insurance, drone technology has numerouseveryday use cases from underwriting, to loss prevention, to claimsadjusting, to disaster recovery.

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For example, drone flyovers can help verify structures andsquare footage while showing hazards like fallen trees and crackedwalkways to validate the condition of a site. Drones can reachgeographically dispersed structures and other hard-to-reach placesmore easily than surveyors or brokers, and can transmit valuabledata seamlessly. They can also aid in identifying building andproperty issues like cold weather damage to reduce claims earlierand settle claims disputes quicker.

By implementing drone data into an insurer's daily routine,underwriters and claims adjusters are able to increase the speed,accuracy and ease of gathering data on buildings and areas needingto be insured, which is vital when servicing them at claimstime.

Just as the emergence of drones promises increased ease andspeed of gathering information that underwriters and claimsadjusters need, insurers must consider certain details beforeimplementing this technology. Here are five things that insurersneed to know before they make the decision to implement drones intotheir practice:

The type of data you're gathering will determine the kind ofcamera you need. (Photo: iStock)

1. Start with the data, not the drone

The first question insurers must ask is: What type of data doyou need?

Answering this question will aid in the selection of hardwarefor the job, including the type of drone you plan to use. Differentaircraft have different uses, whether you plan to fly over onerooftop, a neighborhood or a set of neighborhoods for a long periodof time.

Defining the quality of data needed will narrow down more minutehardware features as well, including data resolution, lens, type ofcamera and sensor resolution. For example, different camera typesexcel at highlighting different types of risks, as a thermal cameradetects hot spots and cold spots on a building while multispectralcameras can show potential risks such as a tree branch hanging overa rooftop.

Additionally, as drone data provides higher resolution imagerythan both satellites and manned aircraft, drones are able to depictresolutions on sub-millimeter levels compared to satellites' 30- to60-cm per pixel image resolution — giving drones a clear advantagecome claims time. Not only are resolutions higher with drones, butdata turnaround time is faster. Data can be gathered in minutes asopposed to days or weeks with satellites or manned aircrafts,allowing resources to be allotted for more frequent sitesurveys.

The FAA is scheduled to issue drone regulations in thelatter half of this year. (Photo: Andrew Harnik/AP Photo)

2. Understand the regulations

Once you identify the type of data you want to collect and thehardware with which you will collect it, you must understand theapplicable restrictions and regulations before your drone leavesthe ground.

Businesses can test and use drones in low-risk, controlledenvironments with a Section 333 exemption from the Federal AviationAdministration. These exemptions apply to specific flightoperations and only allow flights that take place during thedaytime and within line of sight of the operator. Flights nearstructures, airports, and over-populated areas are restricted formost operations, but allowed with specific authorization.

It is important to note that the FAA plans to finalize rules forcommercial drone operations later this year. As the final ruleshave not yet been decided, operators must stay abreast of ongoingdevelopments to stay compliant with the latest FAA regulations asthey are released.

Plotting a flight path (Photo:iStock)

3. Insist on autonomous flight

Another decision facing insurers when implementing dronetechnology is whether to choose manual versus autonomous flight —and autonomous flight is the way to go.

Autonomous flight enables safe and reliable data collection,including automatic takeoff and landing, which is vital as dronesbegin encroaching on prohibited territories. Autonomous flight alsoallows for pre-determined flight routes, contingency responses andsense-and-avoid technology to steer clear of obstacles like powerlines and trees.

Pre-determined flight routes are a boon for insurers as pilotsare able to use a tablet or laptop to plan a flight using onboardcomputers. Operators will be able to map out flight parameters,including where to fly, how photographs should overlap, whataltitudes to fly at, and — most importantly — what happens ifsomething goes wrong with the aircraft. If something does go wrongon the aircraft, there is no doubt that you would rather have yourdrone flying autonomously. However, having the right safety andcompliance controls in place will mitigate any potential in-flightdisasters.

Keep drones out of restricted areas. (Photo:iStock)

4. Require robust safety and compliancecontrols

As accidents happen, companies should consider integratingcertain safety and compliance controls into their dronetechnology.

An important one to consider is geo-fencing technology, whichallows drones to fly legally and safely while confining them to aspecific area — you definitely don't want your drone entering ano-fly zone, like airports or national parks. If the droneapproaches the edge of the geo-fence, it will return to the homelocation and land automatically, avoiding any interference or legalrepercussions you may have potentially encountered when enteringprohibited areas.

In conjunction with specific safeguards, insurers must alsoguarantee that their operators meet aviation authority requirementsand are adequately trained, in addition to obtaining liabilityinsurance. To succeed, standard operating procedures must befollowed with an eye toward worker safety.

Insurers must protect policyholder information acquiredthrough drones. (Photo: iStock)

5. Understand IT and securityimplications

Once you understand the legal ramifications of drone operations,security implications must be considered.

Building defenses into the operating system against hackers andsecurity breaches is definitely a best practice, as dronetechnology will most likely entail some level of cloud computingand storage, which will function to transfer drone data into yourcompany's claims management system.

With this in mind, insurers cannot ignore concerns about privacyand data security, and must safeguard policyholder information fromhacking, eavesdropping and disaster. If proper measures are nottaken to solidify security for drone communications, an insurercould end up with a hijacked drone as a result of dataencryption.

In addition to security challenges, there may also be challengesregarding data storage, analysis and integration, includingintegrating drone software with claims management software andother business systems. Ideally, this type of integration willallow, for example, claims inspectors to open their laptops whenthey get to a site and view the flight plan and geo-fence as datais uploaded and integrated into the back office.

Ultimately, drone technology is beneficial to both insurers andtheir customers: It creates an avenue for both parties to beproactive about protecting assets and allows insurers to makedecisions instantaneously with accurate data. With this technology,teams have an immense opportunity to hasten and improve datacollection in numerous divisions of the industry so workers canaccess vital information when they need it, all while saving time,lowering costs and reducing the risk to human lives. The promise ofthese benefits alone is enough to incentivize insurers to embracenew technologies.

Satyen Paneri is the senior manager for product marketing,data and analytics at Foster City, Calif.-based GuidewireSoftware. Don Weigel is vice president of product andprofessional services at San Francisco-based drone systems companyAirware.

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