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Drone on!?

Published: 19/11/15

Business Insider UK has predicted the value of the global non-military drone market will reach nearly £2 billion within the next decade and that agriculture, energy, construction and news media are among the industries paving the way.

Amazon recently called for a separate airspace zone for commercial drones and the UK Civil Aviation Authority says more than 850 commercial groups have been granted permission to conduct aerial work using drones.

It is predicted that drones could create 150,000 jobs across Europe by 2050.

Technological advances

Insurer Zurich's latest SME Risk Index found only 2% of SME's expect to use drones within the next 12 months. This picture could, however, change rapidly, partly due to technological advances that are making drones cheaper and easier to operate. Most drones now weigh less than 20kgs and cost under £200.

There will have to be regulatory change for the commercial advantages of drones to be fully realised, as in the UK, drones can only be flown within the visual line of sight of the person in charge of the vehicle. Commercial demand, however, is likely to increase pressure on regulators to relax these rules.

As the usage of drones grows we expect the insurance industry will be involved in helping SMEs understand their potential and how they might impact on business.

Operational risks

We've already seen evidence of operational risks associated with the use of drones, e.g. there have been a number of reported near misses between drones and commercial aircraft and an incident in California in which firefighters tackling a wildfire were forced to ground their helicopters amid fears there could be a collision with drones. Last year a Cumbrian man became the first person in the UK to be convicted of 'dangerously' flying an unmanned aerial vehicle, after his drone flew over a nuclear submarine testing facility. He claimed he lost radio contact with the drone and was therefore unable to control it.

When looking to mitigate operational risk, the advice is:

Make sure you are aware of the rules and regulations surrounding their use. This varies depending on the weight of the drone (see the Civil Aviation Authority's website for more details).

Understand how to operate the drone safely. Some newer drones allow users to specify a geo-fence area, reducing the chance of inexperienced pilots losing control and flying their drones into people or buildings.

Take out appropriate insurance – the Civil Aviation Authority (CAA) rules specify minimum levels of cover required. The insurance should consider liability for accidents and injuries or damage to property, personal accident cover for injuries to employees, and legal claims for breach of privacy.

A potential benefit of drones is quicker and cheaper deliveries, e.g. it is estimated that the cost-per-mile of an average diesel truck is more than 30 times that of a drone.

Amazon has also launched a development centre in the UK for Prime Air – that on the completion of regulatory hurdles promises: "a future delivery system from Amazon designed to safely get packages into customers' hands in 30 minutes or less using small unmanned aerial vehicles."

Naturally those SMEs who are the quickest to realise the benefits of these advances in technology could establish a clear advantage over their competitors. And those who do not may find the competitive gap widening as the range of tasks that drones are capable of grows.

Photography

A growing number of SMEs are using drones to take aerial pictures and video footage, with drones proving particularly popular for wedding and sports photography. Estate agents are also using footage from drones to provide a new way of marketing properties.

Anyone considering using drones for commercial purposes must be aware of the requirement to obtain permission from the CAA. Furthermore the CAA, says it is aware of a number of incidents in which businesses have risked a substantial fine by using drones without the relevant permission.

Using drones for photography also carries the risk of breach of privacy, as the vantage point they offer means they are more likely to inadvertently capture images of individuals. The Information Commissioner's Office has detailed guidance on how drone operators can minimise privacy risks, such as unintentionally capturing images of children.

That we will increasingly see drones used within a commercial setting is inevitable, whilst SMEs need to be aware of the opportunities they present, they also need to know the risks. If you are introducing any new technology into your business processes speak to Flint so that we can make sure the insurance implications are fully covered.

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