Up in the Sky... it's a Drone
Regis Coccia interviews Eric Donofrio, Regional Manager, North America Aerospace for XL Group
How likely are we to see drones in U.S. skies soon?
Demand for drones, also known as Unmanned Aerial Systems (UAS) is growing very quickly, but unfortunately the regulatory environment for them has not kept up with this rapidly developing industry. That process will accelerate because Congress has mandated the FAA to create a roadmap by 2015 for integrating unmanned aerial vehicles into the national airspace. There are many companies using and developing UASs for a multitude of different uses right now and we are seeing UASs performing many tasks, but mostly in uncontrolled airspace which does not fall under the prevue of the FAA. There are very few civilian/ non-governmental operators that have been granted the authority to operate in controlled airspace. The biggest hurdle that needs to be addressed by the community is creating a viable alternative to “see and avoid” using the human eye to avoid collision with objects and other aircraft.
What are some benefits to unmanned aerial systems?
First, UAS have lower acquisition costs and operating costs than traditional aircraft. Fuel consumption is certainly less, and no on-board pilot is needed to fly them. Secondly, UAS also can be used in situations where it isn’t practical to use a large aircraft. Another benefit is an unmanned vehicle can be kept airborne longer than a conventional aircraft – potentially indefinitely if you can keep constant the energy needed to operate it.
What would be some common uses of UAS?
For one thing, unmanned systems come in a lot of varieties. Sophisticated ones operated by the military are almost the size of a Boeing 737, and there are some that could fit in your hand – and everything in between, for different applications. Besides military use, the most common uses for commercial unmanned systems are likely to be surveillance, border protection and even agricultural. Crop dusting, for example, can be handled more efficiently by UAS in hilly terrain where terraces are used. Most U.S. farmland is flat, so traditional crop-dusting aircraft can spray there, but you can’t fly those easily in a place like Japan, where the farmland is hilly. Other uses might include oil pipeline surveys and photography. Amazon Prime Air, unveiled recently, is one possibility, but there are probably at least 50 other potential uses of unmanned aerial systems.
What risks do you see in unmanned aerial vehicles such as drones?
There essentially are three areas of risk relating to unmanned aerial vehicles, or UASs: hull damage to the UAS itself, bodily injury and property damage to people on the ground, and bodily injury and property damage involving other aircraft. When you compare unmanned systems to traditional aircraft, one of the major benefits to unmanned vehicles is nobody is onboard. In aviation liability, most of the risk comes from bodily injury to passengers, and UASs are devoid of that.
How might XL Group approach insuring the risk of an unmanned aerial vehicle?
First of all, we would need to know the characteristics of the UAS. When somebody comes to us with a hull and liability risk for manned aircraft, our underwriters know the type of aircraft, how it’s used and where it flies. With UAVs, we have to build a picture of the UAS, how it’s used, how big it is and its method of propulsion. For example, is it a rotorcraft with 6-foot metal rotor system? Those could cause more damage than a system with four 6-inch rotor blades that are shrouded. If it’s a fixed-wing UAS, we would need to know how fast it is, how heavy it is. And we would need to know how it would be launched and recovered. Is there any risk to the people on the ground operating it? Finally, there are considerations about the way a UAS is controlled. There are essentially three types of systems. Systems where the ground operator makes the same control inputs as on a manned aircraft. Systems that are highly automated and stabilized where the operator tells the UAS to simply “go up”, “go left” and the system does the rest - somewhat like an autopilot. The last type of system is referred to as autonomous. In this type of system a script is written for the mission and the operator tells the UAS to start the script and the UAS complies with the script with no pilot involvement.
What concerns you about UASs from an underwriting perspective?
With respect to liability coverage, the area of operation is a big issue. If an unmanned vehicle is operated in the desert, there’s little concern. But if it’s operated over downtown New York, then it really depends on the UAS. The question is, how much damage might it do to people or property if it went down? Another hazard on the hull side is substantiating values. With traditional aircraft, there are references I can go to that tell me what the values are. Those references don’t exist yet for UASs. Likewise, there is not yet a lot of data about accident rates for unmanned vehicles.
When might XL have the opportunity to insure the risks of unmanned aerial vehicles?
We are actively underwriting UASs right now. Just as the industry and the FAA are still in the formative stages of development when it comes to UASs so are the underwriters and underwriting standards for them. If UAS operators are looking for a quote they should contact their insurance broker who can approach any XL Aviation underwriter. We are looking forward to participating in the growth of this new and exciting market.
Contact Eric at firstname.lastname@example.org