Janet Aschkenasy

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]

Emerging Risk: Drones

The Paradox of Drones

Capacity is lining up to cover drones, but a lack of historical data and useful regulation hamper the industry.
By: | July 1, 2015 • 3 min read
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A paradox is emerging in the area of drone or unmanned aerial systems (UAS) coverage.

On the one hand, capacity for UAS–related risks is fairly abundant, according to a report from Marsh. Yet at the same time, underwriting expertise and historical data are in short supply.

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As the insurance industry waits for enough data to more comfortably underwrite the risk, carriers are working off of forms developed for traditional aviation risks. The lack of precise language to address the risks of drones is limiting coverage, and by extension the expansion of the commercial use of drones.

According to a recent report from Marsh, entitled “Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems,” insurance is currently available to cover drone-related property and liability risks such as:

  • Physical Loss to the UAS itself (airframe, propulsion units, operating system, and flight controls).
  • The payload—such as camera equipment and sensors, and the ground station/control unit, as well as spare parts, and coverage for transit.

On the liability side, coverage is available for bodily injury and property damage as well as product liability for re-sellers and manufacturers.

Underwriting Criteria

The report includes a checklist of risk factors influencing UAS underwriting decisions.

For instance, in determining whether or not to take on UAS liability risks, underwriters are looking at:

  • Whether operators are certified by a governing body.
  • The hours flown since the craft was manufactured.
  • Engine type and redundancy as well as aircraft range.

In deciding about UAS property risks, all of the above concerns are taken into consideration as well as additional factors such as endurance, launch and recovery, navigation, operating environment (urban or non-urban) as well as maintenance, storage, countries and safety of the load while in transit.

Considering that much of the coverage that exists today evolved from the aviation market—and considering the shortage of UAS-related claims history, according to Marsh, some carriers are hesitant to underwrite the UAS sector, despite a general glut of capacity.

“It is difficult with the FAA just starting to open the commercial air space, to know what all of the risks are,” an executive with Marsh said.

“There just hasn’t been the claims history or litigation to tell where problems may lie.”

Exceptions to the rule do exist, however: One coverage that’s available which has some uniqueness to drones is insurance to cover the risks to the ground control equipment  — whether hand-held or via a full cockpit layout (often contained in a van).

“Such coverage varies depending upon the size and type of control station and functionality,” according to the Marsh report.

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Still, risk specialists wanting a UAS insurance program addressing only what is needed for unmanned aircraft may want to consider markets who’ve been hard at work crafting specialized coverage for drones.

Another factor limiting the expansion of commercial drone use is a lack of regulation from the FAA. As an opinion piece in the Houston Chronicle recently pointed out, Congress asked the FAA to issue regulations by September of 2015.

The FAA recently announced it could miss that deadline by as much as two years.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]
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Risk Management

The Profession

The international director of global risk management for Jones Lang LaSalle says risk managers need to do a better job at self-promotion in the workplace.
By: | June 1, 2015 • 5 min read

R&I: What was your first job?

I was in high school and taught baton twirling at a dance studio.

R&I: How did you come to work in risk management?

My story is “right place/right time.” An employment agency sent me on the interview. LaSalle Partners was looking for someone who would grow into a risk management position and I wanted a defined career path. I was not familiar with risk management and didn’t have any special interest in it at the time.

06012015_Profession_sidebarR&I: What is the risk management community doing right?

[Risk managers are] looking at risk in a more holistic manner not just in terms of policy silos. They feel more empowered to reach upward in their organizations, and to participate in management discussions about the business of their businesses. Also, more individuals have advanced degrees in risk management so they are entering organizations at a more senior level.

R&I: What could the risk management community be doing a better job of?

Risk managers could be more strategic in their approach and more confident in the impact that sound risk management — not insurance purchasing — decisions have on the success of their organizations. As a discipline we could do better at self-promotion — speaking out about the work we do and its criticality to our businesses. Risk managers often tout the experience of their brokers and insurers, leaving an image in their organization that they just coordinate rather than add value.

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R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I’ve lived the evolution of the discipline from insurance buying to true risk management. The sophistication of risk managers has increased, there are more known and quantifiable risks facing organizations, and regulatory agencies are asking about how risk is managed and demanding transparency of risk evaluations. All of this has led to the C-suite and corporate board or organizational trustees being much more interested in the risk management process. And that’s a huge change.

R&I: What emerging commercial risk most concerns you?

Cyber is one. I think there are internal processes and firewalls you can impose but they are not absolute in covering expenses, and there are insurance policies to buy but they don’t cover the entirety of the exposure.

R&I: What insurance carrier do you have the highest opinion of?

The best way for me to answer that is to describe the ideal insurer: It’s a company that takes the time to understand the risk and differentiates it from the class into which it is grouped, with premium reflecting credit for risk mitigation efforts. It has efficient management of administrative matters such as documentation of insurance, invoicing and policy issuance. In the event of a claim there is prompt and thorough investigation with timely resolution. Through each phase, there is excellent communication with the client. The true differentiator among companies is a willingness to help solve a business problem, which may mean creating a unique insurance solution.

Janice Ochenkowski International Director, Global Risk Management, Jones Lang LaSalle

Janice Ochenkowski
International Director, Global Risk Management, Jones Lang LaSalle

R&I: Do you feel that the contingent commission controversy is overblown?

No I don’t. I think at its essence the controversy was about transparency and about the openness between the broker and the client regarding what compensation the broker was earning from a transaction and whether there was a proper alignment of interest. Because of the controversy there can now be an open dialogue on the issue.

R&I: Are you optimistic about the US economy or pessimistic and why?

I’m a glass half full person so I’m optimistic. The economic reports being issued by the government and industry associations indicate that we are recovering but there is a way to go for full recovery.

R&I: Who is your mentor and why?

I’ve been fortunate to have many mentors throughout my life. My parents always encouraged me to follow my dreams, and gave me their unconditional support, for instance. At Cardinal Stritch University, I was encouraged to try new things and to think of myself as a leader, which I had never done before. My managers at JLL as well as fellow risk managers have helped me to work through difficult issues as well. At each stage of my life I’ve been fortunate to have at least one person to guide me.

R&I: What have you accomplished that you are proudest of?

I’m very proud of the way risk management is regarded within JLL. We are regarded as part of the business process, not an afterthought.

R&I: What’s the best restaurant you’ve ever eaten at?

One of the most memorable meals I’ve had was a champagne brunch at Domaine De Chandon in Napa, Calif. Unfortunately, it’s now closed.

R&I: What is the most unusual or interesting place you have ever visited?

I traveled to Egypt in 2010, rode a camel, visited mosques and pyramids, cruised the Nile, had dinner with a family in their Cairo home, and it was absolutely fascinating. I was so fortunate to be there before so many of the artifacts and tourist areas were destroyed.

R&I: What is the riskiest activity you ever engaged in?

I’m a risk manager. I avoid risks.

R&I: If the world has a modern hero, who is it and why?

Our society is so cynical now that we look for flaws rather than accomplishments. We’re more interested in the “gotcha” moments than examples of brilliance. So sadly, world-accepted heroes are hard to find. I think we’ve moved away from the grand names; today we look for our heroes among our peers and neighbors. We celebrate the individuals who are making a small but measurable difference in our neighborhoods and towns.

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R&I: What about this work do you find the most fulfilling or rewarding?

The creativity of risk management is what I think is the most rewarding. Many people think there isn’t creativity in our discipline, but if you do it right there can be. Finding a unique way to avoid or manage a risk that allows the business to move forward is very rewarding.

R&I: What do your friends and family think you do?

That’s a great question, because of course, most of them have no idea. They do know I’m involved in RIMS but they think it’s an annual trip to a conference, and more recently to Washington where I have been doing lobbying for TRIA [Terrorism Risk Insurance Act]. My relatives think I sell insurance, because they don’t understand how someone could have a full time job and staff to just buy insurance.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]
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Risk Management

The Profession

The executive director of risk management for the SFUSD says enterprise risk management has come a long way, but still needs improvement.
By: | May 6, 2015 • 4 min read

R&I: What was your first job?

At my first ever full time job, I was a counselor in a group home for emotionally disturbed adolescents. I was 22. It was part of a volunteer program in Phoenix.

R6-14p42_Profession.inddR&I: How did you come to work in risk management?

I got a claims job at a TPA back in Orange County, Calif., where I grew up. I had a degree in psychology and the claims business has always been open to liberal arts majors.

R&I: What is the risk management community doing right?

I think we are doing well in strategic and enterprise risk management areas in terms of spreading the word about these disciplines within our organizations.

R&I: What could the risk management community be doing a better job of?

I think we could still improve on the above, particularly in terms of communication. Getting the buy-in from management remains a challenge.

R&I: What was the best location and year for the RIMS conference and why?

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For me, Vancouver was the best venue. I attended RIMS’ annual conference there roughly four years ago and to me, it seemed to have a more international audience.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I’d come back to the focus on enterprise risk management. I get to spend more time in a broader context instead of just being the “insurance guy.” For example, we have some 300 community-based organizations — nonprofits doing mentoring, tutoring, reading, etc. — that want to come and work in our district comprised of 140 schools. [We] work together to bring quality control and internal structure to those nonprofit programs to help us bring more effective programming to our students.

Dave George, executive director, risk management, San Francisco Unified School District

Dave George, executive director, risk management, San Francisco Unified School District

R&I: What emerging commercial risk most concerns you?

I would say cyber security. For me it’s the risk of exposing student data and being sure students are using technology in a safe manner because technology is so integral to the curriculum today.

R&I: What insurance carrier do you have the highest opinion of?

Not an insurance carrier, but an underwriter. His name is Rich Vincelette and he is consistently an excellent thought partner beyond any parameters of an insurance policy.

R&I: Is the contingent commission controversy overblown?

I would say no. Working in the public sector, transparency is paramount and any business model that has the potential to compromise that — or even give the appearance of a compromise — is going to be problematic and rightly so.

R&I: Are you optimistic about the U.S. economy or pessimistic, and why?

Optimistic. I happen to be in a part of the country that is booming right now, in terms of technology, construction and real estate.

R&I: Do you think the technology surge is sustainable this time around?

I would say more sustainable than it was last time because I believe there were lessons learned by those who invest in these companies.

R&I: Who is your mentor and why?

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It’s my boss, Myong Leigh. He is the deputy superintendent for policy and operations for our district. He is very good at thinking big picture and helps give me the latitude to do the same and a broader perspective along with it. He has supported our efforts at enterprisewide risk management and gets the broader application of what we do.

R&I: What have you accomplished that you are proudest of?

We have reduced our risk management expenditure 25 percent and have held that steady over the last five years — partly by looking at operational efficiencies across our work, but primarily by more tightly managing our workers’ comp claims.

R&I: What’s the best restaurant you’ve ever eaten at?

Probably Spago in Los Angeles when I was about 25; it was trendy then and I was young and impressionable.

R&I: What is your favorite book or movie?

My favorite book is called “The Kindness of Strangers,” by Mike McIntyre. It renews your faith in people. It’s a true story about a guy who attempts to hitchhike across the country without bringing any money or credit cards, wanting to see if he can make it all the way “on the kindness of strangers.”  The title probably gives away the ending, but well worth a read regardless.

R&I: What is your favorite drink?

A good craft brew IPA.

R&I: What is the most unusual/interesting place you have ever visited?

Vietnam. It was not what I expected. What surprised me was it did not feel very “Communist.” It felt very entrepreneurial. They had wholeheartedly embraced tourism, for instance.

R&I: What is the riskiest activity you ever engaged in?

Driving a Ford Pinto at over 100 mph on a Los Angeles freeway, as a teenager.

R&I: What about this work do you find the most fulfilling or rewarding?

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The fact that I contribute to things that make a real difference, in this case educating kids.

R&I: What do your friends and family think you do?

I joke that they think I am just always saying “no” to people, in terms of things they can’t do.

R&I: Is it true?

Not at all. We help people find solutions to their problems.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]
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