An essay on unmanned aerial systems insurance and risk assessment

UAV technology has begun to integrate into the National Airspace (NAS), at an accelerated rate. Coupled with a high demand for civilian UAS applications and decreasing component prices, more UAS researchers, commercial operators, and manufacturers begin to fly. Despite a lack of government mandated insurance requirements and mission profiles deemed dull, dirty, and dangerous, the UAS industry is gaining momentum. However, as the UAV industry matures, unmanned aircraft will inevitably crash. In anticipation of these growing pains, insurance carriers must be ready. Unmanned aircraft present a unique matrix of risk endemic to the challenges of flight in the NAS. Underwriters and actuaries will be able to provide peace of mind to pilots and bystanders alike. Insurers must design policies to properly allocate liability and provide a safety net. UAS-tailored coverage will identify and quantify the unique characteristics of unmanned aircraft. Underwriters have just begun to adapt insurance products to suit the needs of the nascent sector. This analysis will outline the process of insuring UAS. Further, it will highlight how insurance companies should cope with the dynamic forces within the UAV market.

I. Introduction

UAS risk management is a large sector in flux. Though the FAA has not moved to impose minimum insurance requirements, underwriters are rushing to fill the void. Though UAS risk assessment may seem trivial, the obvious risks of personal injury and property damage loom. Like manned aircraft, UAS are sensitive and subtle instruments that carry hefty repair and replace costs. Therefore, insurance companies must consider UAS to be comparable to small or ultra-light aircrafts. Since several factors make up the UAS risk matrix, underwriters will take into account who is liable for when a mission fails or causes injury. Problems should be initially divided into two categories of fault, Pilot-In-Command (PIC) and manufacturer (hardware/software malfunction) liability. As the FAA and local legislatures develop a concrete legal framework for these risks, the insurance industry must remain ready and flexible.