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Numbers of unmanned aircraft systems (UAS) to surge as
they become smaller and cheaper
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Innovative technology can accomplish menial or dangerous
tasks but also raises safety concerns such as risk of collision, a terrorist attack or
cyber incident
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Systematic registration of UAS and robust education and
training of operators necessary to ensure safe skies, as reports of near-misses
increase
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New risk environment to spur growth in fast-developing“drone
insurance” market, which could be worth $1bn in the next decade
Whether used commercially
for industrial inspections, aerial photography, border patrol, emergency
deliveries and crop surveys or recreationally by millions,drones o run manned
aircraft systems (UAS) have the potential to become a multi-billion dollar business
and deliver problem-solving technologies across numerous industries.
However, more drones in
the skies also raise a number of new safety concerns, ranging from collisions
and crashes to cyber-attacks and terrorism. To ensure safe UAS operations, systematic
registration of unmanned aircraft and robust education and training of operators
is necessary, according to a new report from aviation insurer Allianz Global
Corporate & Specialty (AGCS):
“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.As drones
are becoming smaller, cheaper and easier to use – and regulatory change,
particularly in the US, lowers barriers to entry - growth prospects are surging:
The US Federal Aviation Administration (FAA) forecaststhat by the end of 2016 in
the USover 600,000 UAS will be deployed for commercial use alone – three times
the number of registered manned aircraft. In addition, 1.9 million UAS are
expected to be in recreational use. Globally, the UAS market is forecast to
reach 4.7 million units[i],
or higher, by 2020 with the market for commercial application of UAS technology
estimated to soar from $2bn to $127bn[ii].
Drones
in Africa
South Africaenacted regulationsin
2015. Since then, four training organizations have been registered with
aviation authorities. The country has 240 license holders and 418 drones.In Nigeria,
UASowners have to obtain permits from aviation and security authorities. All
drones without permit have been banned from the country’s airspace.
For Kenya, various UAS
projects such as those for tracking livestock theft, endangered species, and
photographyfor instance were terminated after regulators imposed bans citing
security concerns. The country’s draft regulations, which were shared with the
public for comment early this year, have not been passed into law.
Interestingly, one of the requirements requires drone operators to have
adequate third party insurance cover.
Rwanda is currently
building a drone port. They hope to have 18 of these nationally. The country
approved itsregulations early in the year and has
committed to educating owners on safe operations during registration.The
aviation authorities in Ghana have had safety regulations in place since 2011.
The authorities have since published standards and practices to regulate the
operations of drones.
Made
for menial or dangerous tasks
“UAS in commercial use
will increase greatly in the next decade because they are effective at carrying
out menial or dangerous tasks,” explains Thomas Kriesmann, Senior Underwriter General
Aviation, AGCS. Work accidents such as employees falling off the roof on
building inspections and workers compensation losses are expected to decrease
as a result.
UAS also have the
potential to both solve problems and save costs in future across a number of other
industries, throughout the developing world and in disaster relief situations. Emerging
uses include delivering blood and vaccines to remote locations in Africa,
fighting grass fires, pest control and even delivering pizza and coffee.
Insurers are also
increasingly utilizing UAS to make risk assessment of construction or
infrastructure projects easier and safer. Claims handling can also be made
quicker and more effective by using drones to survey loss damage after major catastrophes.
For example, when parts of
Tianjin, China, were rendered inaccessible after major explosions last year,
high resolution images taken by UAS after the blasts where compared with
previous photographs to determine how many vehicles had been destroyed. Allianz
even supports a pilot-to-business marketplace, FairFleet, which links pilots with
businesses in need of UAS, offering insurance coverage and claims settlement
services.
Mid-air
collisions and loss of controlcore safety concerns
However, new risks and the
potential for misuse of UAS technology need to be considered, too. UAS raise
two priority safety concerns: mid-air collisions and the loss of control. A
mid-air collision could happen if the pilot cannot see and avoid manned
aircraft in time, especiallythose that normally fly below 500 feet, such as
helicopters, agricultural aircraft and aircraft landing or taking-off.
Reports of UAS sightings
from pilots, citizens and law enforcement have increased five-fold over the
past year in the US;while there have been a number of near-miss incidents
around the world including in China, Dubai, and the UK.
Loss of control can result
from a system failure or if the UAS flies beyond signal range. AGCS sees a
major risk in loss of control from frequency interferences and other factors.
A pilot losing control of
a UAS during a building inspection could result in a total liability easily in
excess of $5 million, if the UAS crashed into a truck or shop, for example. Even a small UAS could cause as much as $10
million in damage alone when hitting an engine of an airplane.
An emerging peril is the
potential terrorist threat from UAS targeting critical infrastructure such as
(nuclear) power stations or live events. Other scenarios include hackers taking
control during a flight, causing a crash, or hacking the radio signal and
transmitting valuable recorded data from the aircraft from another control
station (“spoofing”). There are also many public concerns over UAS around
privacy issues.
Improving
UAS safety: need for training and registration
A primary concern is the
lack of consistent standards or regulations for the safe operation of UAS
around the globe. “In many locations, there are few or no pilot training and
maintenance standards,” explains Van Meter. “In addition to regulation,
education will continue to be key to ensuring safe UAS operations.”
Training has a crucial role to play in
reducing the risk of an incident occurring, with novice control a major cause
of loss activity. Training should include meteorology, emergency instructions,
air traffic law, including flight rules over buildings, system maintenance,
flight time calculation and on-board camera image use.
In many locations around
the world no registration of UAS is mandatory, effectively affording the user
anonymity in the event of a loss incident. “However, in future, identification
of both UAS and operator will be essential to maintain proper liability in
general,” says Kriesmann. “Introduction of car registration-style schemes will
be needed sooner or later.”
“Drone
insurance” for multiple exposures
Insurance can protect both
operators and the public from risk of mid-air collision, as well as physical or
property damage or injury to others. Manufacturers, owners and operators of UAS,
as well as businesses that sell and service UAS,are exposed.
So--called drone insurance
is a fast-growing area of the insurance industry and different coverages are
available, depending on the type of use.
“Whether you run a coffee
shop or a truck delivery business you need insurance to run your business.
Drones are no different,” Van Meter explains. “Commercial operators of UAS will
require at least $1 million of insurance coverage to protect against risk
exposures.” Assuming growth projections for the commercial industry materialize
there is potential for the drone insurance market to be worth $500m+ by the end
of 2020 in the US. Globally, its value could approach $1bn.
Source: Allianz Global Corporate & Specialty Africa
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