What specific challenges does the rise in the use of drones and unmanned aircraft systems for personal and commercial use represent to insurers? Does this rapidly advancing area of technology present an opportunity for the sector?
Drones have notoriously been used for military purposes, but there are numerous potential future growth areas. Many dangerous jobs are likely to benefit from drone technology, including search and rescue, public security and fire fighting. Commercial uses include filming panoramic shots for TV and film productions, and deliveries by drones (a technological charge led by Amazon). Private and leisure use of drones is also becoming increasingly popular (described by the Daily Mail as “this year’s must-have gadget” in December 2014) and lightweight drones are now very affordable.
Current regulations require drones to be within the line of sight of the operator at all times, which significantly restricts their current deployment. The European Commission currently envisages full integration of drones into European airspace by 2028, and it is likely that the use of drones will continue to increase dramatically over this period.
In addition to requiring cover for ‘traditional’ risks such as personal injury and property damage, parties who are involved in the manufacture, supply or use of drones will also need to consider their potential exposure in relation to invasion of privacy and data protection claims. The quantification of these unusual risks may prove challenging for insurers. Insurance cover is already mandatory for all drones which are used commercially and for those which weigh more than 20kg. This mandatory insurance regime may be widened, such that insurance is required for lightweight drones which are intended only for personal use. The risks which may be posed by the use of drones in a personal capacity are likely to be significantly different to those used in a commercial context, and insurers have the opportunity to develop a range of products to cater for the needs of these different parties.
AIG (in addition to a number of other insurers) has been given permission to begin trialling the use of drones in the USA to assist in the investigation of claims (particularly in locations which would ordinarily be too dangerous or remote to access). Drone technology presents opportunities for insurers to investigate claims more quickly, safely and efficiently than “on the ground” investigation methods have traditionally allowed.
Emma Tindall is an associate at BLM
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