By introducing into Congress earlier this month the draft “Preserving American Privacy Act”, a bi-partisan group of US lawmakers are starting to tackle the constitutional and civil liberty issues emerging from the rapid development of non-military uses for Unmanned Aerial Systems (UAS), or “drones”. The concern is obvious such is the sophistication of the sensors they carry and the temptation of their operators to covertly collect vast amounts of information about individual’s activity and behaviour.
Conditioned by TV programmes like 24 and Homeland the American public might be forgiven for seeing UAS technology solely as a means to potentially snoop and eavesdrop on them. This is a pity because as Time Magazine recently reported, UAS are now contributing plenty to the public good and interestingly a great deal to improve risk management and loss mitigation: fighting forest fires, controlling avalanches, predicting tornado formation, studying volcanoes and so on. Emergency workers in Japan even used an unmanned device to survey the damage at the Fukushima nuclear plant.
Insurers will welcome the evolution of a strong legal framework to govern the operation of UAS. Back in 2009 Sir Paul McCartney forced Google to delete images of his house from their Street View application and since then numerous human rights groups have successfully campaigned to fuzz out faces and vehicle registration plates. Unlike the camera cars which are road-bound, UAS can also peek over the fence from the air so the proposed new law that requires operators to obtain a warrant and post a public notice before collecting information at least sets some ground rules for insurers to assess risk and defend claims.
Nevertheless an adequate and competitive insurance solution for UAS operators who risk invading public privacy may still be a way off. The cyber market has been hampered generally on the paucity of legislation, regulation and case-law in the area of data and privacy infringement. The calculation of fines and penalties for those that break the rules and the damages they may be liable to pay the parties who have suffered remains highly uncertain in all jurisdictions. As the application of UAS technology continues to outpace policy-makers efforts to regulate, financial exposures shall remain tricky to quantify and underwriters will not be able to fully provide the solutions that this sector requires.
Roger Bickmore 
It’s good that you’ve highlighted that, like many dimensions of privacy, surveillance has both its upsides and downsides for the public and the corporate world. The reality is that while a drone is gathering tropical storm data, there’s a private investigator trailing your children because the insurer has doubts about your claim. Both raise important issues that society as a whole needs to think about.
My view is that privacy will become one of the next big controversies to entangle the insurance world. This will be driven by: how insurers are sourcing new data for underwriting, concerns and confusion about privacy and changing attitudes to how we share data.
Underwriters looking for new risk opportunities around privacy need to understand some of the underlying levers of exposure, such as consent and the complex divide between public and private domains.
Can I recommend (humbly of course!) an ebook that’s free to download from my website at http://www.duncanminty.co.uk – “Privacy: 5 Sources of Ethical Risk for Insurers”. Surveillance is one of the five sources of ethical risk covered.