In what feels like a short time, unmanned aerial systems (UASs)—also known as drones—have moved from the latest in warfare technology, to high-tech toys, to valuable tools that can have many civilian uses, especially in the insurance industry. This rapid expansion can be attributed—at least in part—to the insurance market's willingness to provide cover for drone deployment, according to a report published June 2 by Marsh, a global leader in insurance broking and risk management.

The report, Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems, indicates that insurance capacity for UAS operations is "plentiful." UAS risks are being written worldwide by Lloyd's markets and companies alike, although the report notes that "appetites are proportional" to the comprehension of risk UASs in general, ratings, working development and the clients themselves.

The Association for Unmanned Vehicle Systems International observes that UAS usage has potentially vast economic benefits—estimated at US$82 billion and 100,000 jobs in the U.S. by 2025.

John Hanslip, senior vice president, Marsh's Aviation and Aerospace Practice, said: "Insurers are using their extensive experience of manned aircraft to assess the risks associated with drones and are providing insurance coverage based on size, uses, and values of the aircraft. Traditional policies for manned aircraft are being brought up-to-date and many only need tweaks to be usable for drone technology and deployment."

(Photo: Shutterstock/Rob Wilson)

Domestic and international regulations may conflict

According to Marsh's research, regulation remains the biggest barrier to the widespread adoption of UAS usage. For UAS operations to fully realize their commercial potential, many experts believe that national and international aviation laws may need to be overhauled and a set of international regulations developed that consider drone use in a consistent manner. In the U.S. state and local laws and regulations also have to be take into account.

In the U.S., the Federal Aviation Authority (FAA) currently authorizes the use of UASs for commercial or business purposes on a case-by-case basis. Businesses cannot fly UASs without express permission from the FAA. However, the FAA has proposed a framework of regulations that would allow routine use of certain small UASs to be integrated into public airspace by the end of 2015.
In the UK, a House of Lords committee has recommended that a register of UASs be created, which will initially target commercial operations. Other recommendations include the use of geo-fencing (allowing or not allowing) flight based upon GPS coordinates, clearer guidance for law enforcement, and guidance on what levels of insurance users should purchase.

Mr. Hanslip added: "While clear and harmonized regulation is being developed, insurers are in the meantime filling this gap by providing their own safety guidance for clients, based on their experience of manned aircraft. In the U.S .alone, several insurers are already writing policies on thousands of drones across the country.

"Internationally consistent regulation is required to enable start-ups to plan with certainty, public perception to improve, and—where the regulation is not unsuitably onerous—entrepreneurs to expand their businesses without feeling held back by 'red-tape.' This, in turn, will fuel the widespread adoption of this type of aircraft."

Special Reports /

Drone industry taking off, thanks to insurers’ willingness to write cover

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