Regulations coming soon will change certification requirements for commercially operated remote piloted aircraft systems, or ‘drones’. Geoff Pratt, Australian underwriting manager for aerospace at AIG, explains the changes.
IB: How significantly would you say the use of drones/remote piloted aircraft systems (RPAS) for commercial purposes has been embraced in Australia?
Geoff Pratt: When you look at the exponential growth of the RPAS market over the last two years, combined with the fact that over 600 certified RPAS operators handle an average of between one and five RPAS each, you have to say that the industry is flourishing. In addition, technology is constantly evolving and becoming cheaper and more readily available for civilian application, making the RPAS sector earmarked as an aviation area of growth.
Up until now, photography and filming have been the most significant RPAS application, and I foresee that this will remain so for some time. That being said, the RPAS fraternity is extremely innovative and has embraced other areas for RPAS use, including agricultural monitoring, disaster management, law enforcement, weather monitoring, television news coverage, oil and gas exploration, pipeline/road surveys, construction and specialist coastal/shark watch.
Geoff Pratt: CASA will enact new RPAS operating rules and regulations with effect from 29 September 2016. These new regulations remove the need for commercial RPAS pilots to hold an Operator’s Certificate in order to operate an RPAS for commercial gain; however, the new regulations will only apply to small RPAS weighing less than 2kg. While a 2kg weight limit is restrictive, it gives businesses leeway to fly drones with HD video capability, such as the Parrot Bebop (420g) and the China-made DJI Phantom 3 (1280g).
The regulation change is the most significant since RPAS implementation in 2002. Following the rule changes, operators will still need to provide one notification to CASA as least five days before their first commercial flight and abide by a set of standard operating conditions as follows:
1- You must only fly during the day and keep your RPAS within visual line of sight.
2- You must not fly your RPAS higher than 120m (400ft) AGL [above ground level].
3- You must keep your RPAS at least 30m away from other people.
4- You must keep your RPAS at least 5.5km away from controlled aerodromes.
5- You must not fly your RPAS over any populous areas. These can include beaches, parks and sporting ovals.
6- You must not fly your RPAS over or near an area affecting public safety or where emergency operations are underway (without prior approval). This could include situations such as a car crash, police operations, a fire and associated firefighting efforts, and search and rescue operations.
7- You must only fly one RPAS at a time. Autonomous flight is prohibited. CASA is still to release its forms, guidance and notification system.
IB: What do you expect will be the practical implication(s) of the changes to the rules?
Geoff Pratt: With less red tape and a dramatic reduction in set-up costs, it would be correct to assume the number of commercially utilised RPAS flying around our cities and suburbs is going to significantly increase. With this expected spike in the number of RPAS, together with their increased functionality, there will be risks involved. However, as with any emerging market, this is a great opportunity for the insurance industry to learn more about drones and how we can support the insurance requirements of users.
IB: What opportunities and challenges do the changes create for the insurance industry?
Geoff Pratt: Like AIG, other aviation insurers will face a difficult task in underwriting a deregulated RPAS industry. Much of our underwriting selection through our facility has, up until now, been underpinned by the rules and regulations set down by CASA. On the other hand, the expected increase in RPAS ownership will present a great opportunity for a larger take-up in aviation insurance policies.
IB: What advice would you offer to brokers who may have clients planning to take advantage of the changes to the rules?
Geoff Pratt: If the broker is not a specialist aviation broker, they need to carefully ensure RPAS owners are meeting all of the operating conditions laid out by CASA, and look at the finer details provided by the client, such [as] what are they using the RPAS for, where will they be using it, who will be operating it, who will it affect, etc. Ascertaining the right insurance policy for a client should be managed as a partnership with the insurer, preferably a specialist aviation insurer in this case.
GEOFF PRATT TALKS CLAIMS INVOLVING RPAS
RPAS exposures, although similar to manned aircraft in some ways, can definitely produce some interesting claims. A particularly interesting example involved an attack on an RPAS by a large wedge-tailed eagle. The eagle, most likely angered by the sight of what it deemed to be a threat, is reported to have used a diving attack on the RPAS (as it would on another bird if threatened). The RPAS was knocked out of stable flight, was unable to recover, and hit the ground causing extensive damage. Another unusual claims example involved an RPAS that, following a controlled, fail-safe return to ground, was urinated on by a passing dog, causing a total loss due to extensive damage to circuitry.
Despite occasional ‘weird and wonderful’ RPAS claims, the most common seen by AIG are for loss of control or mechanical failure, much like we see in the general aviation space. With the majority of commercially utilised RPAS in Australia having hull sums insured of between $5,000 and $15,000, it is the specialist camera and survey equipment attached to the RPAS that poses the greatest exposure to underwriters. General liability and property policy conditions, as a rule, exclude aviation-related equipment and liabilities resulting therefrom, so the specialist equipment is left to the aviation insurance market.