The internet of things promises a lot of advances and insurers are going to reap plenty of benefits from this. Health insurers are going to be able to get live data from the insured parties. Home insurers will be able to better monitor the insides of a home. And so on…

However, there’s a downside to all these device too. You may have missed the news but in July a hacker managed to remotely disable a Chrysler Jeep on the road through a remote wireless attack. This provoked a total recall of the affected product (nearly 1.4 million vehicles) and leaves Chrysler wide open to lawsuits from car owners.

How Does This Affect the Insurance Industry?

While it’s true that the Chrysler hack doesn’t involve any insurance technology, the bad news is that at a recent security conference in San Diego a group of university researchers demonstrated a technique that will have insurers gasping nervously into brown paper bags. They used the telematics black box, an item commonly supplied by insurers to help monitor car usage for fairer policy charges, to hack into a car and disable its brakes.

The group essentially reverse engineered the technology used in the telematics device and discovered several (not just one) ways to exploit security issues in the devices. The team concluded that it wasn’t just the breaks that were at risk either – the exploits could be used to take control of the steering and other systems in the car.

The telematics manufacturer, Metromile, immediately released a patch to overcome the difficulties found by the research team. Unfortunately, it’s not quite that simple to fix as not all hardware updates automatically and the researchers say that other hardware is vulnerable to hacking too.

The implications for insurers are huge. The potential liabilities incurred if a terrorist group or hacking group carried out a large scale hack on black boxes and caused (or threatened to cause) mayhem on the roads is genuinely incredible.

Insurers are going to have to carefully examine how they structure their own insurance to cover any such eventuality. They may also need to carefully consider as to whether telematics is a viable solution in the long-term.

Fortunately, the exploits identified this time around were identified by legitimate security researchers and problems could be fixed before a malicious exploit occurred. Who can say with any certainty if this will be the case next time round? The internet of things just became a much murkier place.

Telematics Insurance

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Over in the United States, things are changing for insurance adjusters. Liberty Mutual Insurance has announced that to make the job safer and simpler; work at heights will now be conducted, wherever possible, by drones. The insurer has obtained licenses to operate and deploy drones though there are some pretty strict conditions on their use.

What’s A Drone?

Drones are flying, pilotless small aircraft which can be controlled from the ground. They are often paired with a camera but drones can be used without cameras too.

Drone design has come on leaps and bounds in the last few years. The original drones were used for aerial surveillance in war zones and later to use for targeting solutions when on the ground intelligence was too risky or impossible to conduct. Then they started getting smaller and smaller and now anyone with a few thousand dollars to spend can buy a drone.

It’s worth noting that many modern drones aren’t designed for heavy duty work. They’re bought by enthusiasts mainly for aerial photography and since they arrived on the market – the legal environment has been constantly adjusted all the way around the world making the deployment of drones more and more difficult.

This is, in part, due to security concerns, in a recent incident in Cambodia a couple of tourists decided it would be wise to fly their drone over the Prime Minister’s house. Fortunately for them, they were only detained for a short period and then released. It could have been much worse.

It’s also, in part, for safety issues – drones are heavy, the license for Liberty Mutual Insurance allows a drone of up to 55 lbs (or 25 kg) to be used; if 55lbs falls out of the sky and onto the head of a passerby – it’s going to hurt.

How Can Drones Help Insurance Adjusters?

The biggest advantage of a drone is that it can survey damage from the air. It allows an adjuster to inspect things that they would otherwise need a ladder to reach.

There’s also a case for the speed of use of drones in major catastrophes; for example, in the case of hurricane or earthquake damage to large areas and again, deploying drones is almost certainly safer than making an insurance adjustor wade through wreckage to make an assessment.

The licenses that have been granted to Liberty Mutual restrict drones to no more than 400 feet (approx. 100 meters) above ground and they are not allowed to move faster than 100 miles an hour. So, it’s clear that very tall buildings may still require other means of assessment.

Insurance adjusters need not worry about losing their jobs to drones either – in fact, drone use will (in the US at least) require someone to pilot the drone and someone to observe the pilot. The footage created by the drone’s cameras will also require an experienced adjuster to analyse the damage.

Other insurers in the US have already begun to apply for their drone licenses and we’re guessing it won’t be long before UK and European insurers follow suit.

Insurance Adjusters and Drones

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