New Insights Article: Unmanned Aviation Risk Management, Accident Prevention, and Insurance

Fri, 06/23/2017 - 10:44
by Chris Proudlove

Drones, also known as unmanned aircraft systems (UAS) or unmanned aerial vehicles (UAV), have become the subject of tremendous media interest, controversy, and misunderstanding. They are already making a significant impact through commercial applications in a wide range of industries and are touching the lives of more people every day.

Several industry sectors, including agriculture, energy, and construction, have identified unique applications for drones. This expanding commercial use, together with potential humanitarian benefits (such as third-world medicine delivery or search-and-rescue missions), will likely win over many of the naysayers.

The use of drones as a way to manage risk in many industrial and commercial settings is just beginning. Fitted with highly efficient and smart payloads, drones can be the ultimate business tool, combining performance with safety. By replacing people on high ladders or rooftops, or eliminating the need for workers to be high above ground with electric cables or near smokestacks, they can perform tasks with a level of safety far beyond traditional methods.

Investment in drone businesses is flowing from venture capitalists, private investors, and numerous large companies. PricewaterhouseCoopers LLP, a consulting group, estimates that the global drone industry will be worth as much as $127 billion by 2020. Industry observers expect the gap in investment, technology, and functionality to close between large military-grade drones and small commercial ones over the next five years.

Privacy and safety, however, are emerging as the two chief concerns the drone industry needs to address with government officials and the public. While the diverse benefits from drone use are clear, managing and insuring against risk will be crucial to success for drones manufacturers and operators.


On August 29, 2016, the Federal Aviation Administration (FAA) enacted Part 107 of the Federal Aviation Regulations, essentially regulating the commercial use of drones weighing less than fifty-five pounds in the United States.

Many in the industry welcome the proportionate approach the FAA has taken to enable the widespread use of drones in the U.S. However, those wishing to operate drones in excess of fifty-five pounds, beyond visual line of sight (BVLOS), or over 400 feet above ground level argue that the FAA has not gone far enough to enable the U.S. to lead the way in this rapidly developing global sector.


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