Insurers Say Drone Rules Needed for Risk Evaluation

March 24, 2015

Insurers applauded a Senate subcommittee for holding a hearing on the use of unmanned aircraft systems and urged swift action from federal regulators charged with integrating the technology into the National Airspace System.

“The marketplace is more than ready for this technology,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC).

“Companies across the country have already begun using drones for many different purposes, and insurance companies are eager to provide coverage for their loss or liability. But we need the government to set the ‘rules of the road’ for legal drone use so that insurers can begin to evaluate different risks and underwrite coverage.”

The hearing was held by the Senate Commerce Subcommittee on Aviation Operations, Safety, and Security, which is chaired by Sen. Kelly Ayotte, R-N.H.

For the hearing, NAMIC submitted testimony and a white paper on questions surrounding drones including how users of unmanned aircraft systems would be covered for loss, damage and liability, and how this emerging technology could also affect insurer operations.

The Federal Aviation Administration has proposed rules for commercial drone use and is accepting public comment until April 24. NAMIC said it is drafting a response outlining the concerns of the property/casualty insurance industry regarding how the proposed rules could inhibit drone use by both insurers and their policyholders.

The FAA also just relaxed rules for lightweight drones flying below 200 feet from the ground.

“Drone technology carries enormous transformative potential for not only the insurance industry, but the entire U.S. economy,” Grande said. “But as the use of drones expands it will be more important than ever for drone users to protect themselves when things go wrong. Insurers are ready, willing and able to provide that protection, but can only do so if the boundaries of legal drone use are defined by the appropriate regulators.”

Several insurers including USAA, State Farm and Erie Insurance have sought approval for drone testing.

Also, as more and more real estate, movie production and other firms fly drones without government approval, not all insurers are waiting for FAA or other rules before plunging into the market. They are writing their own rules and making coverage available for drone operators.

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