If growth projections for the commercial unmanned aircraft systems (UAS) industry materialise, the drone insurance market could be worth $1bn in the next decade, claims a new report from aviation insurer Allianz Global Corporate & Specialty (AGCS).
Recreational and commercial use of drones is increasing. The US Federal Aviation Administration (FAA) forecasts that by the end of 2016 over 600,000 UAS will be deployed for commercial use in the US – three times the number of registered manned aircraft.
The report, Rise of the Drones: Managing the Unique Risks Associated with Unmanned Aircraft Systems, warns that new risks are emerging as drones take to the skies for recreational reasons or for commercial applications like industrial inspections, aerial photography, border patrol, emergency deliveries and crop surveys. These range from mid-air collisions and crashes to cyber-attacks and terrorism.
James Van Meter, an Aviation Practice Leader at AGCS, said: “There have already been enough incidents and near-misses involving UAS to generate concern that the likelihood of collisions and other loss events will grow as numbers multiply.”
AGCS says a pilot losing control of a UAS during a building inspection could easily result in a total liability of more than $5 million, if the UAS crashed into a truck or shop, for example. Even a small UAS could cause $10 million of damage if it hit an aircraft engine.
To protect operators and the public from such risks, the report calls for the systematic registration of unmanned aircraft, operator training and drone insurance.
Van Meter said: “Whether you run a coffee shop or a truck delivery business you need insurance to run your business. Drones are no different. Commercial operators of UAS will require at least $1 million of insurance coverage to protect against risk exposures.”