In an era where technology touches almost every aspect of our lives, it should come as no surprise that the insurance industry is finding innovative ways to leverage it. One of the most striking examples of this innovation is the use of aerial imagery to assess the condition of insured properties. This practice, which has seen a dramatic uptick across the United States, involves capturing detailed images of nearly every building in the country, often without the homeowner’s knowledge. These images, taken by drones, manned airplanes, and high-altitude balloons, are then analyzed to identify potential underwriting risks such as damaged roof shingles, yard debris, and undeclared swimming pools or trampolines.
The case of Cindy Picos, a resident of Northern California, brings this issue to the forefront. Picos was dropped by her home insurer after aerial photos indicated her roof had “lived its life expectancy.” Despite an independent inspection suggesting otherwise, her insurer refused to reconsider. This incident is not isolated. Across the nation, homeowners are finding themselves in similar predicaments, caught off-guard by decisions made from hundreds of feet in the air.
The industry-funded Geospatial Insurance Consortium claims its airplane imagery program covers 99% of the U.S. population, making this form of surveillance nearly inescapable. While insurers argue that such practices allow for less intrusive inspections and faster responses to disasters, the implications for homeowners are profound. The increasing reliance on aerial images for underwriting decisions is part of a broader strategy by insurers to “derisk” their property portfolios amidst rising underwriting losses.
The use of aerial imagery is raising significant concerns among consumer advocates. Amy Bach, executive director of the consumer group United Policyholders, notes a dramatic increase in reports from consumers dropped by their insurers based on aerial images. The core issue lies in the accuracy and currency of these images. Homeowners, like Picos, often find themselves unable to challenge decisions based on potentially outdated or inaccurate information.
Moreover, the industry’s embrace of digital surveillance has sparked a debate about privacy and the right to contest decisions that can have significant financial implications. Some insurers, acknowledging these concerns, have adjusted their policies to allow customers to view the aerial images upon request.
The situation in California, where homeowners like Picos are receiving nonrenewal notices, is particularly acute. State Farm recently announced plans to drop coverage on tens of thousands of residential and commercial properties, citing the financial strain caused by inflation and catastrophe exposure. This trend is not limited to California; insurance brokerages across the country have reported an unprecedented level of nonrenewals since the start of 2022.
As the insurance industry continues to refine its use of technology, the balance between innovation and consumer rights remains delicate. The case for aerial imagery in risk assessment is compelling, offering insurers a powerful tool to manage their portfolios. However, as the voices of homeowners like Picos grow louder, the industry must navigate these waters carefully, ensuring that technological advancements do not come at the expense of fairness and transparency.
In conclusion, while the sky may be the limit for the use of aerial surveillance in insurance, the industry must remain grounded in its commitment to its customers. As we move forward, it will be essential to find a balance that leverages technology to improve efficiency and accuracy without compromising the rights and privacy of homeowners.
Source: “The Wall Street Journal.” Available at: https://www.wsj.com/real-estate/home-insurance-aerial-images-37a18b16
