The Federal Aviation Administration drone regulations that went into effect Monday are expected to usher in a new and dramatic period of change for the commercial use of unmanned aerial vehicles – one that spells potential profit for insurance professionals.
Among other things, FAA Regulations Part 107 removes requirements that a drone operator be a licensed pilot and that a company obtain an FAA 333 exemption, allowing them to legally use drones for a specific task. Such cumbersome requirements took months and often required the hiring of an attorney; in their absence, the barriers for entry are lower and the FAA expects 600,000 commercial drones in the air within a year.
By some counts, that will mean more licensed drone pilots in the country than pilots operating manned aircrafts.
And for their part, insurers are ready and waiting for them.
“This is huge – probably the biggest thing that’s going to lead to an explosion in the [drone insurance] space,” James van Meter, aviation practice leader of
Allianz Global Corporate & Specialty S.E., told
Insurance Business America. “The rules bring a legitimate way for commercial enterprises to operate drones for profit and for insurers to enhance our products to fuel industry growth. We’re already seeing a lot of companies get off the sidelines and enter the space, and we’re getting submissions literally every day.”
Allianz was one of the first insurance companies to enter the market, partnering early on with groups like Embry-Riddle Aeronautical University and even helping to found the UAS Insurance Association, an industry group focused on insuring and managing risk for commercial drone use.
Today, there are roughly a dozen companies writing commercial drone coverage. While policies vary from carrier to carrier, most offer hull and liability coverage, third-party liability exposure for business interruption and first-party property damage for the drone itself.
Though drone regulation prior to Part 107 was fairly restrictive, Van Meter says Allianz sees a wide variety of interest in the insurance product from all industries and markets.
“We get submissions from startups all the way up to Fortune 100 companies with a fleet of drones across the country,” he said. “Their needs vary – some are using more sophisticated equipment with bigger sensors and better cameras – but we see a huge diversity of purchases.”
With the new rules, of course, that will only continue. Insurance agents should be prepared to field these requests from a variety of clients, and to offer advice and eventually go to market for a coverage they may not have placed before.
Van Meter recommends they seek out as much education as possible to ensure their success.
“You can find the information through professional groups. A lot of insurance organizations and associations are either holding CE courses or they’ve put out some documents to guide agents in placing the insurance,” he said. “There’s a robust marketplace writing this business, and insurers are especially excited with these new rules in place.”
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