Insurers facilitating drone use despite uncertain regulatory landscape

A report published by Marsh this week said that the insurance industry is providing cover for Unmanned Aerial Systems (UAS/drones) with plenty of capacity available. But the broker noted that for UAS operations to fully realise their commercial potential, national and international aviation laws may need to be overhauled with a set of international regulations developed that consider drone use in a 'truly consistent manner'. Meanwhile, property/casualty insurance risk information specialist ISO has announced that its new coverage and exclusion options for commercial drones took effect this month in most ISO jurisdictions. The move is designed to provide insurers with further tools to help develop innovative solutions for drone use.hideAccording to the Association for Unmanned Vehicle Systems International, UAS usage has the potential for vast economic benefits-estimated at $82bn and 100,000 jobs in the US by 2025. In its report Dawning Of The Drones: The Evolving Risk Of Unmanned Aerial Systems, Marsh said there is 'plentiful' insurance capacity for UAS operations. "Insurers are actively underwriting policies to secure an early foothold in the sector, despite many regulators struggling to expedite comprehensive regulations that permit drone use, with privacy and national security concerns," said the broker. John Hanslip, Senior Vice President of 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 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," he explained. Also this week ISO announced that its drone insurance coverage options took effect from 1 June. The options modify coverage under ISO's Commercial General Liability and Commercial Liability Umbrella/Excess programmes. Six core options are available under each programme-three optional exclusions and three limited-coverage endorsements. They can be used to address a number of potential exposures with respect to bodily injury, property damage and other liability related to drones, said ISO. "As more businesses introduce drones into their operations, insurers need underwriting tools available to them to address the potential wide range of exposures they'll likely face," said Ron Beiderman, Vice President of Commercial Lines Coverage Products at ISO Insurance Programs and Analytic Services. "Our new flexible endorsement options can help insurance carriers tailor the coverage to address such exposures in ways that suit their risk tolerance." According to Marsh's research, regulation remains the biggest barrier to the widespread adoption and use of UASs. In the US, the Federal Aviation Authority (FAA) currently authorises the use of UASs for commercial or business purposes on a case-by-case basis. Businesses cannot fly UASs without the 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. Mr Hanslip said that while 'clear and harmonised' regulation is being developed, insurers are filling the gap by providing their own safety guidance for clients, based on their experience of manned aircraft. Mr Hanslip said that internationally consistent regulation is required. This will 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', said Mr Hanslip. "This, in turn, will fuel the widespread adoption of this type of aircraft," he said.

Insurers facilitating drone use despite uncertain regulatory landscape

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