Drones are going to severely impact our territory; insurance will be a safety mechanism for the responsible.
The existence of unmanned aerial vehicles (drones) among us is already a reality. Used at one time by the United States government as part of its military strategy, today they are used in the recreational sphere, as well as in the professional and commercial ones.
To illustrate, [here are some of the uses of drones]: Tax administrations make use of drones to assess property taxes on real estate they don’t have easy access to; police surveillance; tracking whales in the Arctic; monitoring livestock and large areas of crops; as well as the use of drones as a means of express transport for delivering goods or food (pizzas, medicine, emergency services and other items).
Also included in these examples are insurance companies in the United States, which have received permission from the Federal Aviation Administration to inspect risks and losses through the use of drones.
As a result, the drone industry market growth is forecasted to reach $89.1 billion in the next 10 years (in commercial and military use).
Proliferation: This puts the ease of access to one of these unmanned devices, with a median price of $500 and an average weight of between 4.5 to 9 pounds (without taking into account the weight of the payload) into perspective. They could fall onto houses, buildings or people.
Emerging risks: This situation clearly poses emerging liability risks. On the one hand, it can lead to damages from destruction of property or prospective injury or death; furthermore, the risk of damages for violation of privacy could exist, a topic openly discussed that has generated calls for precise regulations regarding the use of these drones.
Another risk with less social impact, but which will be deeply analyzed by insurance companies, is coverage of damages to the device itself: repairs, spare parts and replacements, among other factors that could initially slow things down.
Regulation: These liability risks should be defined with special attention paid to future regulations or guidelines produced by the Civil Aviation Directorate General (DGAC). Unsurprisingly, the soon-to-be-released guidelines will provide for:
– Type of Use: Sport or recreational, which doesn’t have to comply with specific formal regulations but is clearly not exempt from misuse; on the other hand, professional-commercial, scientific, humanitarian, emergency, and other uses, where the requirements for receiving authorization are much higher.
– Geography: Avoiding a radius around airports or eventually any other facility that generates risk.
– Altitude: Limited to a maximum altitude of 394 feet (120 meters).
– Time and weather: Use during the day and only when weather allows the remote controller to maintain permanent contact with the drone.
An insurance company can make use of these factors to set its coverage and respective exclusions.
It is essential that insurance companies study these risks soon, mainly because they’re dealing with a “mandatory” liability for everyone who wants to make use of drones, which translates into a matter of public interest.
Rates for Price Risk: From a tech-insurance point of view, insurance companies will need to calculate the price risk they will assume; however, in Costa Rica, there is no experience dealing with such matters, and they should therefore “leverage” the economy and the experience of the international re-insurance market. In this regard, the insurance company will cede the majority of risk to the reinsurer while creating the necessary experience to generate its own rates.
Anticipating: That said, in the future the role of insurance intermediaries will be instrumental in depth analysis of their customers, since they should know about the eventual use or not of drones, and the duty of insurance companies to anticipate these risk studies, since in the medium term their use will be legal, stressing that this liability insurance will be a “mandatory insurance.”
As Andrés Oppenheimer says in his famous book “Create or Die”: “We are in a period of radical transformation,” and Costa Rican society along with the insurance market must be updated and keep up on this journey.