Catastrophe Claims

Technology to the Rescue

Cutting-edge technology such as drones, satellites and 3D imaging allow for quicker, safer and more efficient claims handling.
By: | April 28, 2016 • 5 min read

The growing scale and severity of natural and man-made catastrophes makes it increasingly difficult for insurance companies and claims handlers to access affected disaster sites. It can take weeks or even months for loss adjusters to see the true extent of damage caused by events on the scale of Hurricanes Andrew and Katrina.


But that’s changing with the development of technology such as drones, satellites and 3D imaging, which allow insurers to gather data and images quickly and efficiently, ultimately better protecting their clients against future risks.

There are still hurdles for insurers to overcome, starting with Federal Aviation Administration requirements for operating drones in U.S. airspace, as well as privacy issues, and the potential for property damage or civilian death in the event of a crash.

But uptake is still rising because of affordable hardware as well as increasing onboard instrumentation and offline data processing improvement.

“A lot of this new technology is great at assessing and understanding potential risks in a pre-loss scenario, as well as when an event happens,” said Sheri Wilson, national property claims director at Lockton.

“In some cases, there will always be the need for boots on the ground before the check is written, but this technology can certainly be used to get a more complete picture of what’s going on.”

Rise of the Drones

Jimmy Johnson, assistant vice president of commercial property claims at Zurich North America, said the main advantage of drones is the ability to provide access to difficult-to-reach disaster sites, allowing insurers and their customers to understand losses in greater detail.

“Being able to obtain information almost in real time, whether it’s taking pictures or communicating those losses, is a huge advantage not only to the insurer, but to their clients as well,” he said.

“The app allows them to record and send pictures and videos to the insurer to show them the extent of the damage and it is then uploaded to their server for them to assess.” — Andreas Shell, global claims executive of new technologies, Allianz Global Corporate & Specialty

Helen Thompson, director of commercial marketing at Esri, a geographic information system provider, said that another benefit is the speed of response, as well as use in hazardous situations, such as the port of Tianjin explosion last year.

“Drones are able to quickly assess large areas and identify, with human observation, the scope and scale of the disaster,” she said.

The main sticking point remains that only a handful of insurers, including State Farm, USAA and AIG, have obtained FAA approval to test drones for commercial use.

Gary Sullivan, vice president of property and subrogation claims at Erie Insurance, which was granted a license by the FAA last year to use drones for claims and in catastrophe situations, said that the biggest advantage is safety, as well as the time and cost efficiencies gained.

Andreas Shell, global claims executive of new technologies, Allianz Global Corporate & Specialty

Andreas Shell, global claims executive of new technologies, Allianz Global Corporate & Specialty

“It means the difference between keeping our employees on the ground versus the time and risk associated with having them climb a ladder to get onto a roof, and, ultimately, the imagery we obtain from a drone is just as good, if not better than we would otherwise be able to take,” he said.

Among the disadvantages, he said, were the need for a pilot’s license and having to get clearance to fly in no-go zones, for example, near airports and military bases.

Andreas Shell, global claims executive of new technologies at Allianz Global Corporate & Specialty, said one problem is that drones can only be used if the operator is in close proximity and maintains visual contact.

On top of that, he said, there are a host of legal and regulatory requirements.

“Right now, government agencies are tightening up these requirements more than ever due to the number of private operators currently out there,” he said.

Varying Image Formats

Video technology such as Skype and FaceTime has allowed insurers to develop smartphone apps that can be used to record property damage.

R5-16p38-39_5Damage3.indd“In effect, they allow the customer to become a part of the claims process,” said Shell of Allianz.

“[They can] send pictures and videos to the insurer to show them the extent of the damage.”

Such technology could be used in low value cases where sending out a loss adjuster may be more costly than paying the claim.

David Passman, national director of property claims for North America at Willis Towers Watson, said that when it comes to assessing wide areas of damage, satellites are often the best technology because they can capture a lot of data quickly.

The downside, he said, is that the picture quality may not be as good as a drone or 3D imaging.

“It enables you to take pictures before and after the event, and compare them side by side to determine not only what has happened to the property concerned, but also to the terrain around it,” he said.

“This can also help clients to put into action their business interruption or continuity plan, for example, by knowing what transport routes are open and putting in place an appropriate logistics strategy.”

Future of Technology

Thomas Haun, vice president of strategy for PrecisionHawk, an aerial data provider, said that as with all of these technologies, being able to quickly quantify the extent of damage and understand how safe something is, is critical in the response effort.

“Drones give you that ability to respond quickly and effectively to these types of disaster, but also to prevent or mitigate against future events,” he said.


However, Bud Trice, vice president of catastrophe services at Crawford, warned that despite the many advantages, the biggest challenge with this type of technology is fragmentation, with the possibility of each insurer deciding to go its own way with a different solution, many of which may be incompatible with one another.

Randall Ishikawa, vice president of property risk solutions at EagleView, a 3D imaging company, said that in the long run, technology could help expedite claims handling and reduce operational and claims costs for insurers.

“At the end of the day it can save money for the insurance carriers, and from an underwriting perspective it can determine the viability of the risk concerned as to what action needs to be taken at renewal,” he said.

Erie’s Sullivan added that the potential benefits are huge.

“From an industry standpoint there’s enormous potential because in the future you might be able to fly the drones much more often and to assess the risks on your books in order to identify potential hazards before they happen,” he said. &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]
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Fine Art Insurance

Panama Papers Reveal Hidden Art Assets

Leaked documents shed light on mysteries surrounding numerous masterpieces.
By: | April 27, 2016 • 5 min read
Summer meadow blow balls landscape painting

A Panamanian law firm that created offshore tax havens for a host of well-known world leaders, entertainment celebrities and wealthy individuals has its tentacles deeply rooted in the international art market, according to the International Consortium of Investigative Journalists’ inspection of 11 million documents leaked from that law firm, Mossack Fonseca.


Locked in the so-called “Panama Papers” files, in addition to revelations of a circuitous trail of $2 billion in assets leading back to Vladimir Putin, evidence of tax-haven profiteering by Britain’s Prime Minister David Cameron and incriminating information about the tax-haven holdings of soccer superstar Lionel Messi, there are answers to mysteries involving Rembrandts, van Goghs, Matisses, Chagalls, Modiglianis and other masterpieces, according to the Australian Financial Review.

The “Panama Papers,” reported the ICIJ, also shed light on the real story behind Christie’s milestone 1997 Ganz collection auction, which is credited with starting the art market’s wild enthusiasm for modern art.

These and other art-related disclosures in the Mossack Fonseca treasure trove of documents have raised important art insurance issues.

“The ‘Panama Papers’ have brought to light an unprecedented public, moral hazard that will no doubt increase governmental scrutiny on art ownership and title.” — Robert Read, head of art and private clients, Hiscox London Market

First and foremost is the matter of art title insurance.

Lawrence M. Shindell, New York-based chairman of ARIS Title Insurance Corp., a wholly owned subsidiary of Argo Group, said, “The ‘Panama Papers’ highlight the growing need for transparency in the international art industry. The less the transparency, the greater the title risks with high value, highly mobile art and collectibles.”

Across the many kinds of title risks associated with art and high-value collectibles, whether or not a property insurer has paid insurance proceeds covering the physical loss, clear legal title goes to the core of asset value, which is what enables an artwork to be freely marketable, Shindell noted.

“Hiding away a work of art only compounds the title problems, increases the reality as well as the perception of title risk in an increasingly risk-averse world and impacts object value,” Shindell said.

Diane Jackson, Washington, D.C.- based COO and head of day-by-day operations for Huntington T. Block art insurance brokerage, noted, “In the case of disputed art revealed by documents leaked from Mossack Fonseca and possibly other tax-haven creators, the holders of the art may be asked to provide proof of clear title because the law firm set up the account offshore strictly for hiding purposes.”

Ownership Disputes


If it is determined that art has been hidden in an offshore account, but then the art comes to light publicly, this may well result in a lawsuit being filed by somebody who claims rightful ownership, Jackson added.

“This is typically what happens when heirs will do research to determine if the art belongs to them,” Jackson said. “If they can provide proof that the art was wrongly taken from their family, as in the case of some contested Nazi art, they could dispute the ownership of the art in question. The individuals who have been hiding the art would then need to show how and when they acquired it.

“If a resolution is not reached between the two parties, then the courts would determine who the true owner is,” observed Jackson.

As for storage possibilities for art registered in offshore tax havens, Robert Read, head of art and private clients at Hiscox London Market, said, “Depending on the circumstances of ownership, there are a number of likely storage options for artworks owned by clients the likes of Mossack Fonseca. If the circumstances relate to tax planning, it is likely artworks will be held in a Freeport or under an alternative ownership structure, though it is feasible that such works would be on display in private homes.”

Whether artwork is held in one of the growing number of art warehouses around the world or kept in an owner’s home, property insurance for this art may be provided by law firms like Mossack Fonseca or it may be taken out from an insurance company by the holder of the artwork, Read noted.

If a work of art that has been stolen at some point suddenly comes to light as a part of Mossack Fonseca revelations or by some other means, Chicago-based Scott Hodes, senior counsel at Bryan Cave LLP, said this presents yet another kind of major art insurance-related matter.

“A collector needs to ensure that missing or lost artwork is listed in the records of the Art Loss Register as soon as possible and that the FBI is notified when the loss or disappearance occurred,” said Hodes. “These actions will help establish the collector’s timely claim.”

Hodes added that the collector needs to review the art insurance policy in force at the time of the loss and focus on the definition of “loss” in the insurance policy.

“A financial loss may not be covered,” said Hodes. “But if a theft or mysterious disappearance of the artwork is covered, was the insurance company notified when the loss occurred or was discovered? If so, then the insurance company should be contacted immediately if the policy provides that the insurance company is required to represent the collector in any effort to recover the artwork.”

The collector should check to determine if the policy allows reimbursement of legal fees and costs or provides that the insurer must represent the collector, Hodes said.

“Potentially, this could be a big money saver for the collector,” Hodes noted.

Lastly, Hodes said, the collector may need to act quickly through his or her counsel to file a lawsuit in the proper venue to sequester the artwork and enjoin any sale or disposition of the artwork until a court has ruled on lawful ownership.


But insurance companies themselves may have a means to pursue recovery of stolen or lost works of art that may suddenly come to light in LLCs held by Mossack Fonseca or firms like it.

“Some insurance companies may have already paid claims under terms of the art policy when an insured art collector was the victim of a theft or a mysterious disappearance,” Hodes said.

“As a consequence, the insurance company that paid off the initial claim may now be in a position to sue a LLC to recover the work of art if it turns out that the missing artwork is an asset of the LLC.”

Looking to the future, Hiscox’s Robert Read observed, “The ‘Panama Papers’ have brought to light an unprecedented public, moral hazard that will no doubt increase governmental scrutiny on art ownership and title, but this alone will not be sufficient to force behavioral change among owners. The only way this will affect the art market is if governments enact laws which render current ownership arrangements illegal.”

Finally, Read noted, “The art market typically follows the lead of other established asset classes, so as long as the storage of art in international Freeports behind complex ownership structures continues to be legal, it will likely remain in practice for the purposes of both tax planning and privacy.”

Steve Yahn is a freelance writer based in New York. He has more than 40 years of financial reporting and editing experience. He can be reached at [email protected]
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Sponsored: Berkshire Hathaway Specialty Insurance

Searching for Stability in Cyber Space

The dynamic cyber risk landscape demands a stable insurance carrier with a prudent approach and an eye on the long road.
By: | April 18, 2016 • 6 min read

SponsoredContent_BHSICyber risk affects every industry differently, but there’s one common denominator. No sector is safe.

As headline-grabbing breaches crack systems and tarnish reputations of major retail, healthcare and financial companies, the need for cyber insurance has become increasingly apparent.

Given the constantly changing nature of cyber risk and the market landscape, creating a stable, sustainable cyber insurance business demands a prudent approach, with an eye on the long road.

“We’ve seen carriers jump in and out, wanting to take advantage of a new opportunity, but perhaps underestimating the risk,” said Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance (BHSI).

“As cyber exposure became more tangible to carriers, in-force coverage was tested and many made radical changes to pricing and availability of coverage. BHSI is committed to entering the cyber market in a thoughtful and sustainable way. We want to be there for our customers as the risks continue to evolve.”

Diverse, Evolving Risks

Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance

Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance

Cyber exposure – and coverage — have been evolving, posing different risks and underwriting challenges for different industries. The technology, financial services and healthcare industries illustrate the diverse issues that must be considered in order to provide effective, financially sustainable cyber solutions.

The technology sector was the first cyber battleground, and technology E&O forms included some cyber coverage by virtue of the nature of the risk. “There’s inherent cyber coverage for third party liabilities in E&O,” Librizzi said.

While coverage is widely available, tech companies pose challenges to underwriters because of their unique position in the cyber “supply chain.” These companies provide software, hardware and cloud services; virtually every organization in the world is dependent on a tech provider of some stripe. If an insurer is covering both the provider and its clients, the aggregate risk should be monitored closely.

Think of a DOS attack on a cloud provider that prevents all of its clients – which could include anyone from a bank to a retailer or transportation company — from accessing stored customer or corporate data or running cloud-based service apps. That single attack could bring business in multiple industries to a grinding halt, potentially causing business interruption and E&O losses.

SponsoredContent_BHSIThe tech industry hasn’t seen a large scale event like this yet, but it isn’t waiting around for one to strike before addressing the underlying risk. Controlling and accounting for the aggregate exposure will mold the direction that coverage development takes.

“Our combined form, introduced in October, 2015, is a comprehensive solution that includes first and third party cyber coverage as well as traditional E&O coverage,” Librizzi said.

However, that approach may not be appropriate for other industries. Financial Institutions, for example, may seek a dedicated cyber only policy which does not include traditional E&O coverage.

While banks typically have strong protocols for network security and privacy, they also have a much greater exposure in massive stores of customer data. Financial Institutions are looking to address liability in the form of class action lawsuits or heavy regulatory investigations and fines emanating from cyber, and may not want to compromise their traditional E&O limits.


“Additionally, given the increased reliance on outsourced providers for technology solutions, we have started to see the introduction of sub-limited coverage for dependent business interruption and payment card industry (PCI) fines and assessments as enhancements to coverage,” Librizzi said. “We might see those sub-limits go to full coverage as competition gets heavier.”

Other industries, which may not be as advanced as financial institutions in addressing cyber threats, have suffered more from a lack of robust cyber coverage that can keep up with increasing exposure.

Healthcare, for example, has seen a surge of cyber attacks since hospitals and other health systems went electronic. To a hacker, healthcare providers represent a warehouse of valuable personal identifiable and protected health information.

SponsoredContent_BHSIEmail addresses from healthcare systems typically are white-listed and less likely to get caught in a spam filter, giving hackers incentive to obtain access and gain control of a healthcare provider’s network in order to launch phishing attacks.

After some high-profile breaches in 2015, Human Health Services and the Office for Civil Rights came under scrutiny for not doing enough enforcement of HIPPA. Fines imposed by regulators increased dramatically over the past decade, and seem poised to only get higher.

“They’ll be ramping up enforcement of regulations in 2016, and that’s only a peek of what’s on the horizon,” Librizzi said.

The burgeoning of healthcare’s cyber exposure has challenged the insurance industry to better understand the nature of the risk and how best to secure hospital systems. Coverage for this sector remains the most difficult to write effectively.

BHSI understands the need for different customers to have different solutions. Some customers desire a dedicated cyber policy that does not include traditional E&O coverage. BHSI’s Network Security and Privacy stand-alone policy is designed to address the needs to those customers.

“The cyber exposures and coverages needs of healthcare, financial services and technology are on different timelines and will look very different in the future,” Librizzi said.

Even in more mature markets, the conflation of commercial and personal cyber risk will challenge insurers going forward. Most existing cyber products don’t cover property damage and personal injury; as the risks emerge and the Internet of Things becomes more pervasive, the coverage will have to evolve as well.

“We must always be thinking about what is on the horizon from a risk and coverage perspective – our technology driven society demands it,” Librizzi said.

Anticipating challenges and adapting to each industry’s needs has been a cornerstone of BHSI’s approach to cyber. It’s careful and measured approach has also helped the specialty insurer build an arsenal of experts and ancillary services to help clients better grasp and mitigate their exposure.

“We know the importance of really understanding the risk and communicating it clearly to our customers,” Librizzi said. “We don’t bury our coverage in a pile of definitions, and we provide the expertise to help insureds stay ahead of the next big breach.”

To learn more about BHSI’s professional liability products, visit

Berkshire Hathaway Specialty Insurance ( provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has offices in Atlanta, Boston, Chicago, Fort Lauderdale, Houston, Los Angeles, New York, San Francisco, San Ramon, Stevens Point, Auckland, Brisbane, Hong Kong, Melbourne, Singapore, Sydney and Toronto. For more information, contact [email protected].

The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Berkshire Hathaway Specialty Insurance ( provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance.
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