Old laws won't fly for new drone technology

Swiss Re stages expert symposium on the UK regulatory, legal and commercial issues affecting the underwriting of drone risk.

Drones or Unmanned Aerial Systems (UASs) have long crossed over from the military to the commercial sphere. The global UAS market was valued at USD 6.8 billion in 2014 and is expected to grow to USD 10.6 billion in 2020.

Technology driving drone take-off

The improvement in batteries and the rapid miniaturisation and portability of sensors, radio and positioning technologies have allowed unmanned aircraft to really take off. As Angus Benson-Blair, Chairman of ARPAS-UK, the trade association for small drones points out, their ever smaller size, greater accuracy and lower cost have triggered a proliferation of these aircraft in a variety of industries.

In the UK alone, there are now more than 600 companies using drones to provide a range of services including building inspection, crop analysis, land surveying and photography. Other organisations are also starting to use drones in-house; the BBC and National Grid have already received the necessary authorisation from the Civil Aviation Authority (CAA) to employ these aircraft.

Laws not keeping pace with advances in technology

And while drones can cut human and financial costs, the legal environment in which they operate is desperately trying to play catch up with this fast-evolving technology. The Air Navigation Order 2009 (the key Aviation Regulation document in UK law) was written in 2009, when only a handful of companies were using drones commercially.  Consequently, their widespread deployment today throws up a multitude of insurance liability and coverage issues, from bodily injury and trespass to third party property damage and product liability.

To help us better understand the current commercial, regulatory and legal issues –primarily in the UK– we invited some experts in the field to our London offices to review and debate the topic together with some of our UK clients and partners. Our speakers included:

  • Gerry Corbett, UAS Programme Lead, Civil Aviation Authority
  • Peter Lee, Technology lawyer, Taylor Vinters
  • Angus Benson-Blair, Managing Director of BB Stratus and Chairman of ARPAS-UK

From a regulatory perspective, the UK Civil Aviation Authority (CAA) distinguishes between various groups of small drones, with different regulations applying depending on the weight of the drone.  At the event, the CAA's Gerry Corbett said he expects regulations to continue evolving quickly, although just how this will play out is still unclear. The need to harmonise regulations across Europe, and subsequently globally, will undoubtedly play a part. However, the changing nature of drone use will also be something to consider; the recent increase in the recreational market is challenging the existing regulatory model. Is the CAA - essentially the UK Aviation industry regulator - the best way to regulate all drones usage?

Too close for comfort

According to drones legal expert, Peter Lee, one of the challenges is that hobbyists flying drones lighter than 20 kgs do not require third-party liability insurance. However, it is often these kinds of users who may lose visual line of sight when operating a drone, and inadvertently fly the device too close to a conventional aircraft, a restricted government building, or a nuclear power station. This scenario naturally sets off all kinds of alarm bells.

Technologies such as geo-fencing are helping limit where drones can fly so as to avoid amateur errors and collisions. That said, the big step forward will come when drones are equipped with "detect and avoid" technology, critical to other technologies like autonomous cars.

Legal grey areas could pose problems

Until then, re/insurers will need to navigate around the legal grey areas in which some drone cases will fall, and consider questions such as:

  • What would the consequences be of a drone crashing into a busy public space like London's Oxford Street?
  • How will current legislation deal with drone usage by paparazzi and citizen journalists?
  • Do current wordings need to be amended?

As drone applications continue to proliferate, what do insurers and reinsurers need to consider when underwriting drone risk? And what are the opportunities ahead? Join Alex Smith, Head Casualty Treaty UW Northwest Europe, on Open Minds to discuss.

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UK Drone event 2015


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