In recent years, there has been a significant rise in the popularity and widespread use of drones, and while these devices can be useful in many ways, they have been creating a bit of a liability headache for insurance companies.
As such, the Canadian government is addressing these issues, and continues to progress toward a solution that makes sense for everyone involved.
Drones, often called unmanned aerial vehicles, are gaining popularity across Canada with each passing month, but it was only in May that the federal government announced proposals for regulations on the use of these devices, according to a report from Canadian Underwriter. This is likely to be a good thing because, while there are some enthusiasts out there who are already very committed to using drones on a regular basis, experts agree that their popularity could explode in the next several years, growing more than 10-fold into a $140 billion (U.S.) industry.
What’s the issue?
The problem right now, though, is that there aren’t a whole lot of rules dictating the ways in which drones should be operated safely, and that includes when and how these devices are insured, the report said. Obviously, having even one object that weighs a few dozen pounds hovering above crowded city streets or suburbs poses an inherent risk; what if it fails and crashes into a person, car, home, or business? There isn’t a whole lot of information out there about how often this happens, or what kind of damage is caused, but it’s clearly an issue that needs to be addressed as these devices grow in popularity.
Moreover, there is the fact that, right now, some 700 aviation companies are in operation across Canada, with thousands of different aircraft crisscrossing the country each day, the report said. Sharing the sky with drones whose operators may not be able to fully assess their surroundings for one reason or another poses a real threat to them as well.
How best to address it?
The issue, then, is dealing with ways of creating regulatory controls for scenarios that simply do not exist yet, the report said. Right now, this is a burgeoning industry for even insurers with experience in underwriting policies specifically for aviation, but both premiums and loss trends for those companies have been moving in the wrong direction for a while now, and competition for the relatively small number of people buying insurance for UAVs has been predictably fierce.
However, the fact of the matter is that it could still be some time before the drone insurance market really begins to take shape in Canada, or anywhere else in the world. There are still so many unknowns right now that this is an issue insurers will have to monitor closely to see where the industry is really heading.