Imagine robots that can fly 100 MPH and go as high as an airplane. Imagine these flying robots traveling vast distances to deliver packages and taking pictures- doing work that is either too expensive, time-consuming, dangerous or even impossible for humans to do.
Not so long ago this may have sounded like pure science fiction, but today it is a reality. The commercial, governmental and hobby use of drones has grown exponentially in the last few years as they have become more widely available, less expensive, more versatile, and have seen significant increases in their performance and battery life.
A recent study by Frost & Sullivan noted that spending on drones reached a new high in 2014 with $720 million being spent worldwide by consumers. That equates to a sales volume of 200,000 units per month in 2014 with spending in 2015 expected to double that of 2014. The same study suggested that by 2020, sales of drones could reach as high as $4.5 billion a year. The proliferation of drones and the ever-increasing role they play in commercial endeavors has left governments, commercial aviation, insurance carriers and the general public scrambling for guidance on legal requirements and rights/responsibilities.
What Exactly is a Drone?
According to the Federal Aviation Administration (FAA), an unmanned aircraft system (UAS or commonly called a drone) is the unmanned aircraft (UA) and all of the associated support equipment, control station, data links, telemetry, communications and navigation equipment, etc., necessary to operate the unmanned aircraft.
The UA is the flying portion of the system, flown by a pilot via a ground control system, or autonomously through use of an on-board computer, communication links and any additional equipment that is necessary for the UA to operate safely.
Drones can come in all shapes and sizes with the small hobby versions that can fit into the palm of your hand to governmental drones that are as large as their manned aircraft counterparts.
The cost of the drones also varies greatly with entry level hobby versions being sold for as low as $25 all the way to the larger and more complex drones costing millions of dollars.
The methods and complexity of the operating systems for drones also vary greatly depending on the type and cost of the unit. Some basic hobby models have limited range and are controlled real-time by smartphones or tablets. More expensive hobby models use continually updated GPS or waypoints that are pre-programmed prior to flight and offer ranges that can extend for miles.
Even moderately priced models can contain still cameras, high-definition video cameras that allow live streaming feeds or even specialty testing or inspection equipment such as thermal imaging equipment or atmospheric and environmental data collection equipment.
Not just a toy – Commercial and Sometimes Criminal Use
As drone technology became more and more affordable and the equipment became more easily available, business quickly discovered that drones offered a low-cost, effective alternative to commercial aviation providers.
The use of drones was quickly adopted by the film and television industry, with sports broadcasting and law enforcement soon realizing the value and implementing the use of drones in their operations. Drones have also been used in the agricultural industry and the energy sector for inspections and land surveys. Scientists have adopted the use of drones to monitor wildlife and to collect data in dangerous situations they have not had access to before such as inside a live volcano. The development of new uses of drones for commercial or governmental applications increases every day with no end in sight.
Unfortunately the utility and versatility of drones have also been discovered by a criminal element for more nefarious endeavors. News stories along the US and Mexican border have indicated that drug cartels have recently used drones to transfer illegal drugs across the border, into the US.
There have also been incidents reported in Russia, Australia and the US where drones have been used to try and get items (illegal drugs and other contraband) into prisons. These incidents have left law enforcement with concerns about the criminal use of drones and what other uses criminal enterprise may develop for this new technology.
There was also a recent high-profile incident at the White House where Secret Service agents found a crashed drone on the lawn. While follow-up news reports seem to indicate that the owner of drone did not have any hostile intentions towards the president, the incident definitely illustrated a potential vulnerability to drones at one of the most secure addresses in the world.
Risk to Drone Operators
In the US, the FAA has struggled to integrate the new crop of drone users into the nation’s skies amid conflicting calls for speedier rules by industry and growing concerns by pilots that the devices aren’t safe.
A majority of the public still don’t understand the myriad concerns with the unregulated operation of this technology. In a recent WillisWire blog post, Steve Doyle from the Willis Aerospace group in London outlined the major risks associated with the operation of drones. These risks include standard aviation risks, third-party liability, and privacy.
Standard Aviation Risks
The risks for drones are primarily standard aviation risks. Owners of the aircraft will want to insure the aircraft itself in case of accidents and also cover any ensuing liability. In this interim phase, where approved drone use is legal on a non-commercial basis – when companies must own the aircraft themselves and seek approval for a specific use – aviation cover will be an immediate consideration.
When the commercial breakout happens, which seems inevitable given the multiple uses for airborne cameras, companies hiring the services of drone providers will need to look at their contracts to assess the liabilities they may face. In most cases, this will be a third-party liability situation, meaning the provider would be on the hook, but contracts must be reviewed carefully.
Commercial drones will likely be hired for narrow purposes: inspecting wind turbines for cracks or roadways for storm damage, for example. But the digital eyes will see anything in their view and send back that information to the party collecting the visual data. This raises privacy concerns issues. Surveillance of employees or non-employees, whether intentional or not, could have serious liability repercussions that will need to be addressed.
Risks to Traditional Aviation
The close operation of drones near commercial aviation has made the news several times in the last year. Reports to the FAA of near contact or drones operating too closely to commercial aircraft are increasing monthly.
The FAA has also recently proposed regulations that would cover commercial (other than personal or hobby) use of drones. The newly proposed regulations are still in the comment period, and depending on reaction from the public, may not take effect for another year or more. Some of the proposed rules include:
- Unmanned aircraft must weigh less than 55 lbs. (25 kg).
- Visual line-of-sight (VLOS) only; the unmanned aircraft must remain within VLOS of the operator or visual observer.
- Daylight-only operations (official sunrise to official sunset, local time).
- Must yield right-of-way to other aircraft, manned or unmanned.
- Maximum airspeed of 100 mph (87 knots).
- Maximum altitude of 500 feet above ground level.
- Minimum weather visibility of 3 miles from control station.
- No operations are allowed in Class A (18,000 feet & above) airspace.
- No careless or reckless operations.
- Preflight inspection by the operator.
- A person may not operate a small unmanned aircraft if he or she knows or has reason to know of any physical or mental condition that would interfere with the safe operation of a small UAS.
The newly proposed regulations also outline some requirements for operator qualifications/testing and equipment inspections/certifications. Operators would be required to:
- Pass an initial aeronautical knowledge test at an FAA-approved knowledge testing center.
- Be vetted by the Transportation Security Administration.
- Obtain an unmanned aircraft operator certificate with a small UAS rating (like existing pilot airman certificates, never expires).
- Pass a recurrent aeronautical knowledge test every 24 months.
- Be at least 17 years old.
- Make available to the FAA, upon request, the small UAS for inspection or testing, and any associated documents/records required to be kept under the proposed rule.
- Report an accident to the FAA within 10 days of any operation that results in injury or property damage.
- Conduct a preflight inspection, to include specific aircraft and control station systems checks, to ensure the small UAS is safe for operation.
These newly proposed FAA rules are not intended to apply to hobby/model aircraft that are intended for non-commercial use, but may be a guide for future regulations.
In order to provide guidance to hobby users of drones, the FAA has partnered with three of the largest hobby drone manufacturers to create the Know Before You Fly website. The website is being heavily promoted by the FAA, hobby drone manufacturers and responsible hobby drone owners.
As technology advances at an ever increasing rate, we often struggle to realize new potential safety or liability concerns that are created. The Willis Risk Control and Claims Advocacy Practice continues to monitor this evolving risk and the regulations that could potentially impact our clients.
This post was originally published April 8th, 2015
This post was co-written with Bert Calix, Senior Risk Control Consultant for Willis Risk Control and Claims Advocacy Practice. Based in New York, Bert has over 25 years in casualty risk control. He came to Willis in 2004.