In recent years, insurance companies have increasingly turned to satellite imagery to evaluate the conditions of properties—particularly roofs—for underwriting purposes. This technological resource allows insurers to assess large numbers of properties from the air quickly and cost-effectively.
However, this practice has led to a rise in consumer complaints from homeowners who have faced nonrenewals or midterm cancellations of their insurance policies based on these aerial assessments.
The problem with satellite imagery
Satellite imagery can provide a broad overview of a property’s condition, identifying issues such as missing shingles, sagging roofs or other visible damage. While this can be a useful tool for insurers, it is not without its limitations. The primary concern is that these images often fail to capture the full extent of a roof’s condition—potentially leading to inaccurate or unfair underwriting decisions.
For example, homeowners have reported cases in which insurance companies have decided to nonrenew or cancel policies midterm based on what they perceived as damage from satellite images. In many instances, the supposed damage turned out to be cosmetic issues like discoloration or minor streaking, which do not compromise the roof’s integrity or increase the risk of loss. This has led to frustration and financial hardship for affected policyholders.
Consumer complaints and regulatory response
The rise in consumer complaints has prompted regulatory action in some states, with Connecticut leading the way. On March 19, 2024, the Connecticut Insurance Department issued a bulletin to address the misuse of aerial imagery in underwriting. To reinforce consumer protections, the CID now requires carriers to submit underwriting guidelines, particularly when decisions are based on a roof’s age or condition.
The bulletin underscores the importance of aerial photography in underwriting, but it also mandates safeguards to protect consumers. If aerial images fail to definitively show material damage, insurers are required to either perform a physical inspection or obtain a report from a licensed contractor. Additionally, the bulletin mandates that carriers provide at least 60 days’ notice with specific reasons for policy nonrenewal, ensuring detailed explanations of roof damage are given.
Following Connecticut’s lead, Pennsylvania took similar steps on May 24, 2024, advising insurers not to rely solely on satellite imagery, particularly when the images show cosmetic issues like discoloration or streaking. Instead, insurers were urged to conduct physical inspections to validate any indicated damage. The bulletin also reminded insurers of their obligations under Pennsylvania’s Unfair Insurance Practice Act, which requires them to provide specific reasons for policy cancellations and nonrenewals. Additionally, insurers must give policyholders the opportunity to challenge the aerial imagery results or remedy any identified hazards.
Responses in other states
Despite these proactive measures in Connecticut and Pennsylvania, other states have been slower to respond. Notably, the New Jersey Department of Banking and Insurance, the New York State Department of Financial Services, the New Hampshire Insurance Department and the Vermont Division of Financial Regulation have yet to issue any regulatory actions addressing insurers use of satellite imagery for underwriting purposes.
PIA will continue to monitor this practice throughout the Northeast.
Theophilus Alexander
Theophilus W. Alexander joined PIA Northeast as a government & industry affairs specialist for the Government & Industry Affairs Department in 2023. Prior to joining PIA, Theo had served in both houses of the New York State Legislature. Previously, he worked as a legislative analyst for Hon. New York State Sen. Samra G. Brouk, D-55, and he served at the New York State Assembly, as a policy analyst with New York Assembly Program & Counsel. Theo received his Bachelor of Arts degree in Politics from Ithaca College in Ithaca, N.Y.
