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10.05.2016

New FAA Drone Regulations to Spur Coverage Demand

Joshua A. Jeter - Ironshore Aviation

In August 2016, the Federal Aviation Administration (FAA) issued new drone regulations for commercial operators. FAA reported that more than 600,000 unmanned aerial systems (UAS) – or drones – are expected to be in operation by the end of this year. At issue is the FAA’s intent to integrate commercial, non-military UAS into the national air space. Drone activity in an already complex, busy air space will instigate new risk exposure realities for commercial drone operators. 

FAA’s mandate evolved from a special task force of aviation and technology experts convened in 2015 to develop recommendations for a registration process and operational guidelines for commercial unmanned aerial systems. Notably, the recently announced regulations do not address safety or operational constraints for the more than 1.9 million recreational drone users. Regulation Part 107 removes requirements that a drone be operated by a licensed airline pilot. The regulations, however, do stipulate that drone operators must first pass an FAA-administered test of their “aeronautical knowledge.” According to the FAA, more than 3,000 individuals registered for the test the first week regulations were released.   

Restricted, core operational procedures require strict adherence. Commercial entities can deploy drones that weigh no more than 55 pounds and the drone must fly below 400 feet at speeds not exceeding 100 mph. UAS also must be visible within clear sight of the operator and only be in flight within the commercial operations approved airspace. Sight requirements establish operational times of half hour before sunrise and half hour after sunset. FAA Regulation 333 allows the agency to grant exemptions to commercial operators seeking waivers for other project- specific operational tasks. 

UAS technology is evolving rapidly, unleashing new opportunities for cost-efficient commercial applications within various industry sectors. Utilities, particularly electric providers, can inspect transmission and distribution lines for damage and repair. Drones can enhance agricultural crop monitoring activity and far-reaching imagery provides first-hand oversight of complex often expansive infrastructure projects. Fire departments and other emergency services espouse the benefits of timely, broader response effectiveness.  Widespread enthusiasm for drone applications is driven by studies and the proven notion that drones are a safer and less expensive alternative to low helicopter commercial sightings and inspections.

Insurance coverage for drones typically provides protection against hull and liability claims. Policies also can offer protection against 3rd party liability exposure for business interruption loss and/or 1st party property damage caused by the drone operation. Within the new FAA regulatory paradigm, insurance underwriters must become knowledgeable about emergent unmanned vehicle exposures, as opposed to historical known manned aircraft risk. UAS safety is the prevailing concern driving prudent risk management attention for commercial operations. Risk scenarios identified as potentially resulting in significant loss, in as of yet untested commercial insurance territory, are mid-air collision incidents and loss of control by the licensed drone pilot.

Transportation Secretary Anthony Foxx commenting on the new regulations stated, “People are captivated by the limitless possibilities unmanned aircraft offer.” By imposing new UAS procedural strategies, FAA is signaling acknowledgement that commercial drones are an inevitable technological player in the national airspace environment. The challenge now for commercial entities pursuing effective deployment of drone operations is to balance the economic potential with safety priorities.

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