The rapid development of the drone industry is underpinned by the insurance market's willingness to provide cover for the deployment of the technology, according to a new report from Marsh, an insurance broking and risk management firm.
Marsh's report, ‘Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems,’ indicates that insurance capacity for UAS operations is plentiful. Insurers are actively underwriting policies to secure an early foothold in the sector, despite the fact that many regulators are struggling to expedite comprehensive regulations that permit drone use, says Marsh.
According to the research, regulation remains the biggest barrier to the widespread adoption of UAS usage. For UAS operations to fully realize their commercial potential, national and international aviation laws may need to be overhauled and/or a set of international regulations developed that consider drone use in a truly consistent manner, the firm says.
“Regulators around the world have initially struggled to embrace and regulate this new technology,” the report says. “However, some progress is finally being made, as regulators weigh the potential benefits of using drones against issues surrounding privacy and national security.
“Meanwhile, the insurance industry is responding to demand at its own pace. While capacity remains plentiful, over-subscription is coming to the aid of the new start-ups in this class as insurers seek new ways to bolster their balance sheets.
“Expertise and historical data (unlike capacity) are not super-abundant; however, insurers are eagerly testing the waters of this dynamic industry.”
John Hanslip, senior vice president of Marsh’s aviation and aerospace practice, says, “While clear and harmonized regulation is being developed, insurers are, in the meantime, filling this gap by providing their own safety guidance for clients – based on their experience of manned aircraft. In the U.S. alone, several insurers are already writing policies on thousands of drones across the country.”
Marsh, a subsidiary of Marsh & McLennan Cos., is headquartered in New York City and serves clients in more than 130 countries.
The full report can be found here.