May 13, 2015 by Canadian Underwriter
In fewer than five years, the use of drones, also known as unmanned aerial vehicles (UAV), could become common practice for almost 40% of businesses, suggests a study released on Wednesday by Munich Re.
The survey asked respondents when they think drone use will become common practice for businesses (>60% of U.S. companies using drones): 48% of respondents said five to 10 years, 37% said less than five years, 10% said more than 10 years and 5% said never.
Munich Re America’s 2015 Drone Survey was conducted on-site at the Risk and Insurance Management Society (RIMS) Conference in New Orleans, LA last month. It is intended to represent the sentiments of 100 risk manager attendees who participated through in-person interviews, and who were primarily from large and mid-size companies doing business in the United States, Europe, Asia, Australia/Oceania and Africa.
The survey asked respondents what is the greatest risk of using drones for business purposes. A total of 69% of the risk managers surveyed said potential issues related to “invasion of privacy” were their biggest concern, followed by inadequate insurance (12%), personal injury (11%), and property damage (8%). [click image below to enlarge]
Munich Re, which combines primary insurance and reinsurance under one roof, reported that an estimated 30,000 commercial and civil drones could be circling the skies in the U.S. by 2020, according to the Federal Aviation Administration (FAA). The Association for Unmanned Vehicle Systems International also estimates that between 2015 and 2025, the drone industry will create 100,000 jobs and contribute US$82 billion to the U.S. economy.
“Businesses have set their sights on new applications for drones that could speed product delivery, monitor crops or capture claims data among dozens of others uses,” said Gerry Finley, senior vice president, casualty underwriting, Munich Reinsurance America, Inc., in a press release. “Drones are also attracting the attention of public entities who view these ‘flying robots’ as a way to reduce some of the dangers law enforcement officers and other responders face. In some cases, drones will become a common aspect of an organization’s operations. However, there are technical, legal, regulatory and risk management issues associated with drone use that must be addressed over time.” [click image below to enlarge]
A total of 44 % of the risk managers surveyed believe their own companies would consider the use of drones if the FAA approves rules for UAVs, and 76% said they would invest in UAV-specific insurance coverage even if it was not required.
“The drone insurance market is still evolving,” Finley added, “as the industry looks at ways to provide coverage for businesses that offer drone services to other entities, or for traditional industry segments that own and operate drones as an incidental part of their operations.”
Finley noted that the Insurance Services Office has released a series of optional endorsements to address some liability issues, but the “lack of credible loss information remains a critical issue for insurers as they seek out the best solutions for this emerging exposure for their clients and the public.”