The era of drones

Three years ago, drone operators considered that the lack of availability of appropriate insurance was a major problem hampering the development of their business.Today, this concern is gone but major changes are ahead of us. A scan from the past to the future helps understanding how this evolution happens.

The era of drones
Flying drones are aircraft
A debate took place in the early days to figure out if the flying component of Unmanned Aircraft Systems (UAS) – i.e. the drone – was indeed an aircraft. Light devices designed for leisure were presented as toys or flying robots to avoid the application of aviation regulations.

The clarification took place when administrations stated that whatever the weight and the use, a flying device is an aircraft subject to the related regulations.

Simultaneously, it was recognized that the pace at which the sector grows, requires a considerable change to the way these regulations account for new devices. Where the sky accommodates hundreds of thousand aircraft of all kind worldwide with well-established traffic regulation procedures, the challenge is to accept millions of drones without impacting flight safety. 2017, the safest year ever for airline passengers, recorded no fatality on jet aircraft for more than 4 billion passengers transported, and 2 fatal accidents of small turbo-prop aircraft resulting in 13 lives lost. 

How to manage the growth of a promising activity in an economic sector where professionals have contributed to reach such a high level of safety, is the challenge that the Civil Aviation Authorities (CAA) currently face.

Segmenting the market
The CAAs recognize the need to limit the application of prescriptive regulations currently used for manned aviation to drones that are designed to be integrated into the existing traffic. More flexible rules should apply to light drones that are flown in a segregated environment, namely below the minimum altitude below which manned aviation should not fly except for takeoff and landings. 

A distinction should also be made between drones operations. Professional use over cities should be subject to greater constraints than occasional use for leisure within Visual Line Of Sight (VLOS) in non-populated areas. Hence the concept of Specific Operation Risk Assessment (SORA) that the Joint Aviation Authorities on Unmanned Systems (JARUS) published in summer 2017 . 

This document recommends a risk assessment methodology to establish a sufficient level of confidence that a specific operation can be conducted safely. These evolutions are major changes for the aviation community. The transition period needs to be managed as time is needed to accept the new environment.

The adaptation of the insurance sector
Insurance companies support these efforts with a balanced approach aiming at facilitating the experiment of new applications, while disseminating the safety culture of manned aviation to new comers to this field. The first step in the European Union was to make clear that Regulation (EC) 785/2004 applies to drones that are recognised as aircraft. For aircraft with a Maximum Take Off Mass (MTOM) below 500 kg, the insurance in respect of liability for damages caused to third parties shall be no less than 750 000 SDRs  corresponding to approximately 900 000 EUR. This limit of insurance can be provided by any liability insurer.

Amongst the short list of exemptions, the one concerning model aircraft with an MTOM of less than 20 kg was controversial. The debate is hopefully now closed on three grounds: Flying without third party liability insurance is inconsistent with the safety culture that the authorities want to implement; this culture is based on responsible behaviour. A restrictive application of this exemption limited it to aircraft flown in model aircraft associations or clubs, which promote flight safety and provide insurance when you become a member. 

A wider reading of the exemption extended it to aircraft used for recreational purposes; insurers providing private liability insurance can insure such flights of light drones (MTOM below 2 kg – 95% of the existing fleet) as long as they remain within VLOS. This is done through private liability insurance, which penetration should be increased in many European countries. Most professional uses of light drones can also be covered by general liability insurers.

With the support of reinsurers, they consider that the risk is not higher than the ones they already cover in a factory or a construction site. To the contrary, their use usually decreases the exposure of workers to hazardous situations. Aviation insurers, with specialised professionals and limited resources, focus on more specific operations, such as long range mapping or flights over cities. These operations should be carried out by entities that are flight safety savvy, a point that aviation insurers check before underwriting the risk. This comprehensive and adapted insurance approach is disseminated by the European Commission through the DroneRules.eu  project.

What is next?
The change in mindset is happening. Now that drones designed to transport passengers have flown in China or in Dubai, voices are heard from individuals saying that they are willing to use them. The aviation community (airlines, air forces, airports) recognizes the potential of these aircraft and want to cooperate to speed up their deployment. In such positive environment, capability to detect and avoid other aircraft remains critical. This concern – common to autonomous car manufacturers – should foster the efforts of tech firms in this area. Aviation insurers will stay tuned to facilitate these changes while continuously promoting flight safety. This is our commitment at Global Aerospace worldwide. 

By Jean Fournier, Global Aerospace

1 https://rpas-regulations.com/wp-content/uploads/2017/07/170626_JARUS_Specific-Operations-Risk-Assessment_SORA_v1.0.pdf
2 Special Drawing Rights: http://www.imf.org/external/np/fin/data/rms_sdrv.aspx
3 http://dronerules.eu/en/

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