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Insurers will cover drones as numbers rise


Insurance cover for the commercial use of unmanned aerial systems, usually referred to as drones, will become more easily available in Australia as numbers of the machines grow, LMI MD Allan Manning says.

Professor Manning, who uses drones in his loss adjusting work, told that QBE Aviation has a policy covering operators’ liability, but not property.

At least one local underwriting agency has a policy in place, and additional covers are expected to enter the market as the use of commercial drones becomes more common.

He was commenting on a new report from global broker Marsh which predicts that 10% of the global general aviation fleet will be made up of drones within 10 years.

The report, Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems, examines the growth of the aircraft and the insurance industry’s role in providing cover.

The report says regulators around the world “have initially struggled to embrace and regulate this new technology”.

“However, some progress is finally being made as regulators weigh the potential benefits of using drones against issues surrounding privacy and national security.”

Marsh says the insurance industry is “responding to demand at its own pace”, with insurers seeking new ways to bolster their balance sheets.

“Expertise and historical data (unlike capacity) are not super-abundant,” Marsh says. “However, insurers are… using their experience of the manned class to assess the risk and/or limiting their exposure by selection against size, uses, and values of the aircraft, or the type of coverage offered.”

Drone risks are being written worldwide through Lloyd’s, although Marsh says appetites are “proportional to the comprehension of risk, ratings, wording development and the clients themselves”.

At present the largest growth area is expected to be for unmanned cargo that requires up to $US1 million ($1.29 million) physical loss sums insured.

Marsh says the US Federal Aviation Agency is two years away from finalising rules related to drones, but “several US insurers are already writing policies on thousands of drones across the country”.

The report says these insurers “are writing their own safety rules”.