The use of unmanned aircraft systems (UAS) or drones globally is seen to reach new heights - and so is the demand to insure the technology against emerging risks.
That is the latest forecast from Allianz
Global Corporate and Specialty (AGCS), which said in a new report that growth prospects are surging because drones are becoming smaller, cheaper and easier to use while regulatory changes, particularly in the US, are lowering barriers to development.
Citing figures from earlier studies, AGCS said there would be 4.7 million UAS units by 2020, with a market value of US$127 billion.
“UAS in commercial use will increase greatly in the next decade because they are effective at carrying out menial or dangerous tasks,” said Thomas Kriesmann, senior underwriter general aviation at AGCS.
The company said insurers are also increasingly utilising UAS for easier and safer risk assessment of construction or infrastructure projects. Claims handling can also be made quicker and more effective by using drones to survey loss damage after major catastrophes, such as the port explosions in Tianjin, China, last year
However, new risks and the potential for misuse of UAS technology should also be considered, AGCS warned. Drones raise two priority safety concerns: mid-air collisions and the loss of control.
“There have already been enough incidents and near-misses to date involving UAS to generate concern that the likelihood of collisions and other loss events will grow as numbers multiply,” says James Van Meter, an aviation practice leader at AGCS.
These risks and the resulting physical or property damage to UAS manufacturers, operators and the public will propel the demand for drone insurance, according to AGCS. The company said by the end of 2020, this new market could be worth more than US$500 million in the US and US$1 billion globally.
“Whether you run a coffee shop or a truck delivery business you need insurance to run your business. Drones are no different,” Van Meter said.
“Commercial operators of UAS will require at least US$1 million of insurance coverage to protect against risk exposures.”
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