P/C Carriers Responding to Commercial Drone Interest

Property/casualty insurers have responded positively to the soaring interest in and use of commercial drones, even as global regulators struggle to keep up with the nascent industry, Marsh said in a report.

Some insurers are being so proactive they have written their own safety rules to fill the gap left by regulators, Marsh said.

At the same time, insurers that plan to offer the coverage have plenty to learn even as real estate agents, Hollywood studios, Amazon and other businesses are testing commercial drone use to enhance their work, the global broker noted.

“The road ahead … is filled with challenges of comprehension, education and provision, both to end users and manufacturers,” Marsh said. “Concerns over privacy also abound, and there is little doubt that this subject will generate much debate in the future, particularly once a precedent has been set following a successful series of claims.”

That precedent will be hard to obtain, however, Marsh said, because insurers embracing commercial drones are dealing with a new client base that itself is adjusting to rapidly changing technology.

Marsh said that there aren’t yet enough precedents in terms of claims and education to let underwriters accurately assess commercial drone risks. They expect that to change over time, however, as manufacturers develop standards and the U.S. Federal Aviation Administration and other government officials around the world create official regulatory structure for drone use in this new age.

Regulations for commercial drone use vary widely around the world. The European Aviation Safety Agency, for example, has a policy on commercial drone operations, but it lacks details on operator/pilot requirements or aircraft licensing. Individual European countries vary on what they allow. On the other hand, countries including Brazil and Canada have no current regulations on commercial drone use. As Marsh noted, the F.A.A. in the U.S has proposed commercial drone regulations, which are now in draft form, but insurers and other businesses are lobbying for quicker action.

The use of drones could become common practice for almost 40 percent of businesses in fewer than five years, according to corporate risk managers surveyed by Munich Re at this year’s Risk and Insurance Management Society (RIMS) conference. Those same risk managers said they will buy drone insurance even if it’s not mandated.

Meanwhile, insurers including AIG, USAA and State Farm have obtained FAA exemptions to test commercial drones for insurance claims review after natural disasters, risk assessment, and other underwriting functions.

Marsh cited statistics asserting that one tenth of the global civil aviation fleet will be unmanned within 10 years, and annual global spending on commercial drones will double to $11.5 billion.

Marsh’s report is called “Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems.”