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The Rough Notes Company Inc.



April 29
13:11 2019


Scooters and shooters and drones, oh my!

By Christopher W. Cook

Bob Dylan said it best back in the ‘60s: “The times they are a changin.’” And as the times change, so do the risks involved with everyday life, especially as technology continues to advance. The ‘60s saw a focus on health issues linked to smoking—leading to adjusting insurance premiums based on tobacco usage—and the challenges of the Space Race as the United States competed with Russia for dominance in spaceflight capability. Then some other stuff happened. Fast forward to emerging risks of today; let’s look at a few.

E-scooters and autonomous vehicles

In the cities that have rolled out rentable e-scooters, you’ll find them everywhere and often in inconvenient places. Recently I was returning home from a concert in downtown Indianapolis to find one lying in the middle of my traffic lane.

Companies like Lime and Bird offer an alternative means of transportation by renting out scooters through an app; the user pays a small fee to unlock the vehicle—usually one dollar—and additional fees—typically less than a quarter—per mile of travel. When finished, they can be parked anywhere, if they aren’t blocking public paths or left in the middle of the road (sigh).

According to Daniela Lohse, property/casualty innovation leader for Nationwide Insurance, “On-demand mobility may drive a shift from personal vehicle ownership to shared mobility, which could drive growth in the commercial auto insurance market while the personal auto insurance market declines.”

At this point, most scooter renting companies don’t offer insurance; it’s generally listed in the user agreement that riders typically “agree” to without reading. Like other ventures in the sharing economy, who is held responsible when an accident occurs on an e-scooter?

“Personal auto policies generally exclude liability associated with the use of vehicles with less than four wheels,” says Dr. Andries Willemse, vice president of Engle Martin’s specialty loss group and executive general adjuster. “Given how many scooters have been made available in cities all over the world, the resultant popularity as a result of ease of use and low operating cost, it’s likely that we will see the development of products specific to many types of ridesharing, including scooters.

“The operator’s medical insurance will likely cover expenses associated with injury following an accident, but in the event of the operator being liable, there may be no liability coverage. Under some circumstances, homeowners policies may provide a measure of coverage when the insured is away from the home.”

The terms and conditions in your clients’ policies will determine whether they’re covered. If your clients frequently use e-scooters and ask about being covered, double check the wording in their personal auto policy.

But there can always be exceptions when it comes to accidents, right? What if a scooter hits a pothole? What if a scooter hits debris in the road—possibly left after a vehicle hit a pothole? Who would then be responsible? The rider? The jurisdiction?

As more cities introduce e-scooters into their environment, “be cognizant of local regulations, ordinances and laws,” says Willemse. “In most cities, owners must file proof of insurance with the city before permission to operate is granted. Intimate knowledge of these requirements is critical.”

As for autonomous vehicles, the 2019 Deloitte Global Automotive Consumer Study shows that the appetite of consumers for autonomous vehicles (AVs) lags the pace of the automotive industry’s investment. Consumer trust is stalling, as 50% of  U.S. survey respondents do not believe that AVs will be safe.

“Autonomous vehicles have begun to enter the real world in pilot testing and have consequently encountered real-world challenges,” said Craig Giffi, vice chairman of Deloitte LLP, in a study press release. “A series of high-profile incidents may have contributed to the plateau in consumer trust in this year’s study, but there will likely be a longer-term trend toward gradual acceptance.”

Added Joe Vitale, Deloitte’s global automotive sector leader: “Connected, electrified, and autonomous vehicles offer tremendous value for society, but consumers will be slow to adopt these advanced technologies at scale until there is clear and undisputed improvement in safety, cost, convenience, and superior customer experience from a trusted brand.”

Like e-scooters, how will autonomous vehicles affect the insurance market?

“Given how many scooters have been made available in cities all over the world, the resultant popularity as a result of ease of use and low operating cost, it’s likely that we will see the development of products specific to many types of ridesharing … .”
—Dr. Andries Willemse
Vice President of Specialty Loss Group and Executive General Adjuster
Engle Martin

“Within current legislation, the onus rests with the vehicle operator,” says Willemse. “In the case of a driver operating in a ‘hands-free’ environment and then crashing into another vehicle, the driver remains responsible for intervention if and when needed. In the case of an operator-free AV crashing into another vehicle, it is likely to be the manufacturer and/or its programmers who would be responsible. Both examples assume the AV was at fault.

“From a pricing perspective, insurers price according to risk, so as the accident costs associated with non-AV vehicles decline, personal auto policies for non-AVs could see an 8% to 15% reduction in premium—in principle at least. Having said this, it will take a long time to normalize personal auto policy premiums to reflect what—in theory—promises to be a safer, collision-free environment.

“It’s possible that we will see a shift away from personal auto toward product liability.”

Adds Lohse: “Autonomous vehicle technology alone does not fundamentally change the legal theories of liability associated with motor vehicle crashes. As vehicle operation transfers from humans to automated systems over time, risk is anticipated to transfer from individuals to manufacturers and/or third parties involved in the chain of distribution.

“It is likely that consumers will still need some form of personal coverage for their activities as occupants of autonomous vehicles.”

Active shooter

With no end in sight to mass shootings in the country (sadly), some companies are offering active shooter/workplace violence insurance programs.

According to Willemse, active shooter products can cover:

  • Physical and property damage to cover building repairs and damage
  • Liability, usually referring to the duty of care on the part of property owners to ensure the safety of clients and renters
  • Business interruption, associated with denial of access or physical loss of insured property
  • Public relations, which covers issues related to crisis or event management like dealing with the press, staff and families involved
  • Medical and death benefits, as well as trauma counseling
  • Loss of reputation and reduced brand value

The McGowan Companies, headquartered in Fairview Park, Ohio, offer a program that covers liability and extra expenses, victim death benefits and additional medical benefits. The program will consider all classes of business, like government agencies, educational and religious institutions, hospitality, entertainment, retail, and public entities.

Southern Insurance Underwriters, Inc., headquartered in Alpharetta, Georgia, offers a Deadly Weapon Protection Program, which covers funeral expenses, property damage and business interruption (as an optional coverage), among others.

Aside from policies, your clients can take additional action to protect their businesses from a tragic accident by developing a preparedness plan. In March, the Risk and Insurance Management Society (RIMS) released its Active Shooter Preparedness for Your Organization report.

Bureau of Labor Statistics data show that more than 20% of workplace violent attacks in 2016 were committed by individuals classified as recognizable threats by employees. Assailants often display warning signs; recognizing these signs is the first line of defense. Red flag signs may include:

  • Poor work performance
  • Unkempt appearance
  • Frequent outbursts
  • Unexplained absences and tardiness
  • Volatile and defamatory social media activity

In the RIMS report, Steve Smith, founder and president of Guardian Defense, says it’s important to understand someone’s pattern of behavior. “Many of us are around each other eight hours a day, five days a week at minimum,” he says. Demonstrating remorse after “snapping” at a co-worker is critical when distinguishing between progression and an isolated incident.

A reporting policy, where employees can report threatening activity anonymously, should be developed and initiated by a company’s risk manager and HR department. Employees may not be comfortable discussing personal domestic issues, but they should be encouraged to alert HR if a spouse or partner with deadly intentions might enter the office with a weapon.

Even with security in place, aggressors can still breach the building. A preparedness plan is a must so employees will know how to respond to the ensuing chaos. Plans should be customized based on the company’s size and location. Most contain three key elements:

  • Run. The best way to lessen casualties is to try to escape; leave your belongings behind and try to warn others if possible.
  • Hide. If escaping is not possible, hide from the shooter’s view, locking and blocking doors when possible.
  • Fight. As a last resort, fight back using anything nearby as a weapon.

The plan should be tested and practiced by everyone in the organization.

“Putting the plans on paper, training all staff and conducting drills are where we find the best starting point foractive shooter preparedness,” Smith says. “Build a foundation for preparedness by following a model of ‘policy, train, drill.’”

Training employees in preparedness plans is accomplished by three popular methods:

  • Walkthrough. The risk manager and key personnel first privately “tour” the worksite to construct the plan. Afterward, they guide the staff and instruct them on the appropriate actions to take.
  • Tabletop. A presentation with visual cues and illustrations is shared with employees.
  • Live Events. Drills are the most effective method. A planned live event can include the previous two methods. An unplanned event truly demonstrates that the participants know what to do without warning.

Drills and regular practice of the plan are crucial, especially for companies that experience high turnover rates. Plans should be updated if the company moves to a new location.

“A lot of companies think this is the sort of thing where you can train once and ‘check the box off,’” Smith says. “Every individual needs to know how to respond to an active threat and be successful with it.”

After training is complete, gather feedback from all participants. Smith suggests a “hot” debrief immediately following the event, and a “cold” one a week or two later.


Unmanned aerial vehicles have entered the insurance space (see the December 2018 issue of Rough Notes).

“The use of drones is becoming more widespread as a field tool used by insurance companies directly as well as by independent adjusters and surveyors,” says Willemse. “Technological advances in drone size, speed, payload optics and maneuverability are making it increasingly easier to obtain advanced imaging in areas that could have been potentially hazardous to persons on foot.”

According to Nationwide, “rather than a claim associate scaling a steep or tall roof, unmanned aircraft systems (UAS) can quickly and accurately document damage while capturing measurements that can be leveraged to complete an estimate of damage. Access to more efficiently and effectively inspect customers’ property has been the most significant impact since the insurance industry embraced UAS.”

Nationwide’s UAS fleet covers all lines of business, and its “operators receive comprehensive in-flight and classroom training and must successfully pass an exam to obtain a Remote Pilot Certificate as required by the FAA Part 107.”

The regulatory framework—FAA Part 107—became a requirement in 2016 for commercial drone operators. Nationwide’s commercial drone insurance can be added to CGL policies and covers a wide variety of incidents.

In January, PrecisionHawk and Skylogic Research released a whitepaper, The Economics of Using Drones for Beyond Visual Line of Sight Inspections. It explains why understanding the economics of drones is the most efficient way to launch an effective drone strategy.

For the insurance industry, the use of Beyond Visual Line of Sight (BVLOS) for claims inspections has the potential to significantly change business models because drones can be used to cover a wide area and collect high-quality data in real time. Think about the recent flooding in the Midwest or wildfires in California.

While BVLOS doesn’t make economic sense for individual homes damaged by fire, high winds, or other perils, the process is beneficial when dealing with catastrophic events. On a slightly smaller scale, Extended Visual Line of Sight (EVLOS) works for multiple properties. The method was used in 2018 to map the Leilani Estates neighborhood in Hawaii after the volcanic eruption. In one day, the area of around one square mile was mapped and the extent of the damage to many homes was identified. Several homes had lava flowing through the yards and were not accessible except by using drones.

The insurer interviewed for the whitepaper estimates that the process could save 20% in costs associated with adjusting claims. This includes the ability to make quicker assessments and a comprehensive data set that allows zooming in and reinspection without the need to send a physical adjuster back out to the site. The use of drones will also lead to fewer accidents and/or fatalities from adjusters who may fall from roofs.

Times are certainly changing. And as we all await Amazon to deliver our recent purchases by drone or have KITT from Knight Rider automatically drive us to work, let’s be aware of all the emerging risks taking place around us. n

For more information:


Engle Martin

Guardian Defense



The Risk and Insurance Management Society

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