Drones – it’s the word on everyone’s lips this year as insurance professionals discuss the next industries likely to present opportunity to carriers, wholesalers and brokers alike.
And with good reason. Transport Canada approved of only 66 permits in 2010, which then skyrocketed to 1,672 in 2015, and the industry as a whole is already predicted to generate billions of dollars in economic impact over the next 10 years.
Unfortunately, all of that could come crashing down if insurers and agents are not more proactive in their efforts to create and provide viable insurance solutions.
According to a recent analysis in Fortune, significant liability and a lack of regulatory guidelines are making it difficult for insurers to provide well-rounded products for drone manufacturers and operators. UK insurance house Lloyd’s has even gone on record saying risk pricing for drones is extremely difficult in view of their emerging status and inherent issues like third-party liability for physical damage, to say nothing of a lack of meaningful data and risk metrics.
The report points to Canada in particular as a country that has such a high threshold for insurance coverage, it could present obstacles to the development and proliferation of drones.
While it acknowledges that Transport Canada has reduced some of the regulatory burdens accompanying commercial drones, it also mandates that any “professional drone operator” must maintain $100,000 in liability insurance for any unmanned aerial vehicle, regardless of size.
Although this requirement may help to keep inexperienced drone pilots out of the sky, reducing the likelihood of colliding with passenger aircraft or interfering with aerial firefighting, it could also put a halt to the use of drones for commercial purposes.
In the end, insurers will need to work with regulators to create viable solutions so that the drone industry can thrive while liability remains at a minimum.
“The insurance industry itself is grappling with a lot of these issues, and how all this plays out is integral for the future of the industry,” Lisa Ellman, a drone policy expert, told Fortune.
