Insurance Industry Supports Drones in Taking Flight

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According to a report published today by Marsh, a global leader in insurance broking and risk management, the rapid development of the Unmanned Aerial Systems (UAS/drone) industry is underpinned by the insurance market’s willingness to provide cover for the deployment of the fledging technology.

UAS usage has potentially vast economic benefits – estimated at US$82 billion and 100,000 jobs in the US by 2025 (Association for Unmanned Vehicle Systems International). Marsh’s report, Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems, indicates that insurance capacity for UAS operations is plentiful. 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. 

John Hanslip, senior vice president, 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 the 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.

According to Marsh’s research, regulation remains the biggest barrier to the widespread adoption of UAS usage. For UAS operations to fully realise their commercial potential, national and international aviation laws may need to be overhauled and/or a set of international regulations developed that consider drone use in a truly consistent manner.

  • 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. Other recommendations include the use of geo-fencing (allowing/not allowing) flight based upon GPS coordinates, clearer guidance for law enforcement, and guidance on what levels of insurance users should purchase.

Mr Hanslip added: “While clear and harmonised regulation is being developed, insurers are in the meantime filling this gap by providing their own safety guidance for clients, based on their experience of manned aircraft. In the US alone, several insurers are already writing policies on thousands of drones across the country.

“Internationally consistent regulation is required to 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’. This, in turn, will fuel the widespread adoption of this type of aircraft.”

About Marsh
Marsh is a global leader in insurance broking and risk management. Marsh helps clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. Marsh’s approximately 27,000 colleagues work together to serve clients in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of
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