Commercial drones capture the attention of insurance industry
Story by: Jacqueline Nelson The Globe and Mail
Tuesday, Jan. 19, 2016
Companies across Canada are turning to drones to monitor crops, snap pictures for real estate listings and map the oil sands – and insurers are swooping in to cover the risk of hard landings and injuries.
Intact Financial Corp. is the latest to attempt to tap the market for insuring drones, or unmanned aerial vehicles (UAVs), which aren’t typically covered under a commercial insurance policy. Canada’s largest property and casualty insurer says the demand from its small and medium-sized business clients is increasing as more of them use drones as part of regular operations, particularly for surveillance in sectors such as farming.
“All of a sudden, they start – rather than walking the fields – using drones to take pictures and see if there are issues,” said Alain Lessard, senior vice-president of commercial lines at Intact. And that comes with potential hazards. “A person could be sued because the drone hit someone.”
While the commercial use of drones is still getting off the ground, it’s a key segment of a global market that is expected to grow to $11.5-billion (U.S.) by 2024, according to Teal Group, an aerospace market analysis firm.
The rise of UAV insurance comes as a wave of new technologies reshapes insurers’ businesses, creating new areas of coverage and ways of connecting with customers. Insurers now have teams dedicated to cyber threats, and some have begun to cover emerging businesses such as ride-sharing. The potential for “disruption” by agile tech companies tapped into changing consumer behaviour is also an ever-present concern, pushing Intact and some competitors to boost their branding and leadership in the digital space.
When it came to drones, Intact found a disconnect between old coverage and new technology.
“As part of our commercial lines policy, [drones] would usually fall into an aircraft definition. All aircraft are usually excluded from our regular policy,” Mr. Lessard said. That was pushing some clients to specialty insurers in the aviation space, even for 2 1/2-kilogram drones. Intact decided it could accommodate these machines alongside its customers’ commercial lines policy.
Rules for operating a UAV for commercial purposes have been clarified by Transport Canada over the past two years and are more lenient than in the United States. But even if businesses meet the exemption criteria and avoid a special flight operations certificate, most still need to have proper liability insurance coverage.
Most drones fall between those used for large military applications and the Frisbee-sized copters flown by hobbyists. These worker drones carry cameras that can collect data and help companies monitor operations and environmental impact faster – and in some cases more safely – than sending a human.
Cenovus Energy Inc. has been testing UAVs since 2013, and has now flown them more than 60,000 kilometres.
The company hopes to monitor pipelines by drone some day. “To be able to do that, we are waiting for Transport Canada to introduce regulations that would allow us to fly our UAVs beyond the line of sight,” Cenovus said in a statement. In the meantime, its three drones are busy mapping out oil sands sites in northern Alberta.
Companies often start with one low-cost drone or work with a third-party provider to prove return on investment, said Andrea Sangster, spokeswoman for UAV maker Aeryon Labs Inc. in Waterloo, Ont.
“We’re seeing growth in the commercial markets with oil and gas and the utilities, as well as cell tower inspection,” Ms. Sangster said. The company’s drones have been used for diverse applications, such as counting salmon swimming upstream, 3D modelling and taking readings of office buildings’ thermal output.
At just a few thousand dollars for some basic drones, companies can get into the game cheaply. Aeryon’s higher-end drones, which can weather cold temperatures and high winds, are priced from $60,000.
Annual revenue from sales of commercial-use drones is projected to soar by 84 per cent this year up to about $481-million, according to a recent international report by Juniper Research.
Mr. Lessard said most operators essentially need the same kind of insurance against physical damage to people or property. Limitations to coverage include using the drone to “take pictures of someone through the window of a hotel or something like that, and that person is being sued,” Mr. Lessard said. “We’re not covering these kind of things.”
When Zurich Canada began offering coverage last year, it excluded noise pollution issues caused by drones, which can sound like swarming bees, as well as sabotage.
Drones: This year’s hot gift a safety headache for regulators
Story by: Catherine Thompson, The Kitchener-Waterloo Record
WATERLOO REGION — They’re one of the hottest Christmas gifts this year, but drones are causing big headaches as regulators try to draft rules fast enough to keep up with a big influx of the them.
The Federal Aviation Administration, which regulates aviation in the United States, predicts one million drones will be sold south of the border this Christmas season.
While no one expects anywhere near that number to be sold in Canada, authorities are gearing up for a surge of people who snap up the devices as a great holiday gift.
“Drones are a popular portion of our toys business and they’re touted to be best gifts this holiday,” says Elliott Chun, Best Buy Canada’s communications manager.
Hundreds of models are available. At Best Buy in Waterloo, the windows are plastered with drone photos, and you can walk in and pick up a drone for $200. Online, you can buy one of more than two dozen models, ranging in price from $120 to $4,500.
They appeal to everyone from hobbyists “who just like to fly and/or race” to professionals wanting top-quality equipment, Chun says.
Because anyone can walk into a store and buy one, or order one online, and there’s no requirement to get a licence or register the devices, Canadian regulators admit they have no idea how many drones are out there already.
That easy access means many of the people who pick up a drone at Best Buy or Staples may not realize what the risks are, and may not be aware there are regulations around how to fly them. They may not be looking out for potentially deadly obstacles such as hydro lines.
Drones are becoming more visible in Waterloo Region. Last month, a plane taking off from the Region of Waterloo International Airport came within three metres of a drone, just three months after several pilots spotted a drone flying near the end of an airport runway.
A drone reportedly flew over the thousands of spectators at this year’s Oktoberfest parade. Online, there are local drone-shot videos of this year’s ChristKindl Market and the light rail construction construction.
What most people don’t realize, though, is that many of those uses are illegal.