Insurers Face Challenges as More Drones Take Flight

December 9, 2016

Developing a drone program in any size enterprise will involve investment and risk, according to Global Aerospace, which has insured small unmanned aerial systems (UAS), weighing under 55 pounds, since 2012.

This is one of the key observations in a new white paper, Sky High Drone Growth Presents Challenges and Opportunities, published recently by Global Aerospace, a global aviation and aerospace insurance provider. The paper is the third in a series outlining the growth of the drone industry.

“Global Aerospace has a unique awareness of the realities of the Unmanned Aircraft Systems market today,” said white paper author Chris Proudlove, Global Aerospace’s senior vice president and manager of UAS Risks. “We work with a significant number of companies to help them understand best practices and safely utilize this incredible technology, in a way that will foster long-term success.”

Image: DataWing Aerial Analytics
Image: DataWing Aerial Analytics

According to the paper, the current regulatory environment, is said to hinder some operators due to the stringent requirements of Part 107. Restrictions of night flights and flights over persons not associated with drone flights is particularly onerous to some who would like to exploit the technology to its full potential. For insurers, there is considerable risk in insuring an aircraft that isn’t required to have an airworthiness certification.

The paper outlines the growth of drone insurance over the past three years. It states, “Year-over-year growth has been almost threefold. Some periods have seen nearly a doubling of applications from one month to the next.”

According to the paper, insurers are adapting to the market:

  1. by changing their products;
  2. by updating the means of distributing and selling those products; and
  3. by expanding the way in which customers can tailor insurance programs to their individual needs via on-demand products.

Specialist aviation insurers are best equipped to offer flexible coverage for drone operators, the paper notes.

The bottom line is that Proudlove expects significant growth in the use of drones since the FAA released Part 107 rules, including by insurers.

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