Best Sees Insurance Opportunities with Increasing Commercial Drone Use

May 12, 2015

A.M. Best’s analysis of the growth in the use of drone aircraft concludes that the “commercial use of drones presents exciting possibilities to a number of industries, but as with any new technology, unique and unanticipated risks arise.

“Drones represent a small but rapidly growing segment of the aviation industry. In some ways, drones are similar to remote controlled model airplanes, but current drone technology also draws from military developments, especially with respect to remote control capabilities and imaging quality.” They also come in many different formats, and are their use is governed by the Federal Aviation Administration’s rules and regulations.

“With aviation losses mounting over the past number of years, one potential bright spot for commercial insurers is in the unmanned aircraft systems (UAS),” Best said. While the FAA’s regulations and guidelines “were established in order to increase safety and keep pace with this rapidly growing technological phenomenon, there has been some criticism from “organizations wishing to move forward with drone usage,” who consider that the “pace for setting the guidelines has adversely impacted commercial business, including insurance.”

Best summarized the regulations, adding that “under the proposed FAA framework, aviation rules for operating small UAS devices have made it extremely restrictive for anyone who wishes to operate them for commercial purposes. Though some would counter that it is best to proceed cautiously to ensure unanticipated risks do not lead to the occurrence of an otherwise avoidable disaster.

“As a counterpoint to the approach by the FAA, the European Aviation and Safety Agency (EASA), has released a regulatory framework more focused on innovation, with an approach that is less restrictive and focused on a progressive and risk based system,” Best continued.

“The agency indicated that drones should be integrated into the existing aviation system in a safe and proportionate manner. They have proposed three categories of drone operations: Open, Specific, and Certified. Each category is progressively more restrictive with control levels dependent on drone size and weight, intended service, risks posed to commercial aviation, proximity to populations, and operator skill requirements.”

Source: A.M. Best

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