Filed Under:Agent Broker, Commercial Business

Keeping up with commercial drone risks

3 risk manager questions answered

Underwriters have no appetite, or a very limited appetite, for commercial operations that put the drone overhead or in close proximity to people. (Photo: iStock)
Underwriters have no appetite, or a very limited appetite, for commercial operations that put the drone overhead or in close proximity to people. (Photo: iStock)

Business analysts predict the U.S. drone industry will grow to $91 billion by 2024.

Related: 10 risks and misuses for drones

Between now and then, drone adoption will likely continue to grow among personal hobbyists — not to mention the increased popularity of drones for commercial applications in such industries as insurance, agribusiness, construction and energy.

Ask an expert

Grant Goldsmith is the president of Overwatch Risk Solutions, a division of Avalon Risk Management, where he also serves as a divisional vice president. Goldsmith is an industry expert on unmanned aerial vehicle (UAV) technology and trends within the insurance industry.

He sat down with the commercial property team at Verisk Analytics to share expertise gleaned from a 10-year active military career, 15 years of reserve duty, and a long history of multinational risk management and brokerage experience in the marine insurance space.

The following excerpt from this conversation was originally published on the Verisk website, and is reproduced here with permission.

Verisk: What are some of the common risk scenarios that you see with commercial drone use?

Goldsmith: The most common risk scenario today, in terms of losses, is the lost-link incident: The ground station operator loses the link with the drone in flight, and the drone flies off. That shouldn’t happen for a number of reasons. Most drones have lost-link fail-safes that require them to return to their launch site automatically or just hover and land if they can’t reestablish contact. We've seen three lost-link claims, and in two cases, the drones were not recovered. If the insured has hull coverage, the insurer pays for the loss of the drone. The single biggest concern from a claims standpoint for insurers is a third-party bodily injury claim. That's why underwriters have no appetite, or a very limited appetite, for operations that put the drone overhead or in close proximity to people.

Related: Evaluation and mitigation of drone-related risks

Verisk: What sort of commercial operations are exploring or already embracing the value of single drones and drone swarms?

Goldsmith: Drones and drone swarms are best used in four-D (desolate, dull, dangerous, or dirty) operations. Using drones for precision agriculture and wide-open spaces is viewed as low risk. Operations in a downtown or densely populated area are higher risk. Drone swarms are somewhat new, but sending out a swarm of drones that can talk to each other, cover a larger area, and provide overlapping views of information has the potential to be very effective in some scenarios. Imagine conducting a search for a lost person in rough terrain. Today, we have to send out dogs or searchers on foot; in the future we may send a drone swarm with heat-sensor cameras. Imagine how much faster you can search using a swarm versus one drone.

Related: 9 essential facts about drones

Verisk: What resources are available for further education and insight on drone technology and risk management practices?

Goldsmith: There’s a growing body of third-party providers that offer good drone operator and safety training and overall best-practices management. The companies are starting to put up regional facilities that allow people access to good training close to their homes or work. We’re starting to keep a list of those facilities and will post them on our web page, which we’re currently updating. It will become a great resource for clients looking for training and legal advice on setting up their company and applying for FAA flight approvals as required.

Zack Schmiesing is the director of thought leadership at Verisk Commercial Property. Verisk is a data analytics provider serving customers in insurance, natural resources, and financial services. To find out more, message

See also:

Game of drones: Liability and insurance coverage issues coming

5 risks that threaten the drone industry


10 steps to mitigating drone risks on construction sites

New technology opens up potential exposures for contractors.

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