Benefits And Risks of Using Drones: What Businesses Should Know

New hazards and exposures always surface when it comes to technological advances.

Everyone’s been hearing about drones (a.k.a. Unmanned Aerial Vehicles, or UAVs) in the news lately. This makes sense, given the dramatic increase in drone usage throughout the country and as well as around the world. The U.S. alone now has 175,000 commercially licensed drone operators, and the global demand for drones is expected to grow. Goldman Sachs estimates that spending on drones used for commercial purposes will top $19.6 billion worldwide between 2016 and 2020.

Top uses of drones

The number of ways people are using drones – particularly in the commercial sector – is rapidly growing. Top uses now include:

• Professional photography and filming

• Construction site monitoring, including inspection of bridges, telecom towers and pipelines

• Safety and security consulting

• Land surveying

• Aerial image- and data-capturing at construction sites, for use with Building Information Modeling (BIM)

• Search and rescue operations, as well as crime scene operations

Agricultural inspection and spraying

Top concerns of drone usage

With technological advances, new hazards and exposures always come to light, including:

• Injury to people or damage to property arising from drones that fall from above or crash into buildings or other aircraft

• Privacy, as virtually all drones are equipped with cameras

• Cyber liability, as drones capture both data that is stored within the drone and what’s beamed to the cloud

• Financial loss if usage of a drone causes business interruption

How the insurance industry is addressing these concerns

Both legislation and technological advances have mitigated the risks. Specifically:

• Commercial drone operators must register drones and obtain the necessary Remote Pilot Certificate with Small Unmanned Aircraft Systems rating. Recreational drone operators can sidestep these requirements by following a separate list of guidelines.

• Flight regulations have been established, including prohibiting drones from flying higher than 400 feet. They must remain at least five miles away from airports.

• Manufacturers are incorporating safety features in drones, such as:

• Geofencing, which prevents a drone from flying outside a certain designated area or above a certain height.

• Obstacle Avoidance Systems, which help drones avoid collisions with other aircraft.

• Tracking technology, which can be used to monitor a drone’s location.

Argo Pro takes a proactive approach to new exposures in the market, identifying new risks while looking to put solutions in place for clients. Feel free to contact Dan Gmelin at daniel.gmelin@argoprous.com if you’d like to learn more about how Argo Pro is addressing drones.

About the author

Based in Jersey City, New Jersey, Dan Gmelin is vice president of underwriting and head of Architects & Engineers at Argo Pro. He is tasked with growing Argo’s Architects & Engineers, Contractors and Real Estate Developers books of business. He is a recognized thought leader in the industry, having served on multiple panels ranging from risk management to innovations in construction technology. Gmelin has published numerous articles on topics such as advances in drone technology, risk management, safety on the construction site and more. Gmelin is a member of the Professional Liability Underwriting Society.

Gmelin was previously senior vice president and A&E product head at Hiscox Insurance Company, where, as one of their first U.S. employees, he helped build their professional liability department from the ground up. Gmelin has prior experience in multiple professional liability products, including A&E, Miscellaneous E&O, Allied Healthcare Technology, Cyber and General Liability. Prior to Hiscox, he was a senior underwriter at Professional Indemnity Agency, and before that, a financial advisor with CIBC Oppenheimer’s High Net Worth Private Client Group. Gmelin graduated with a degree in economics from the University at Albany, SUNY.

About Argo Pro

Argo Pro, a member of Argo Group, is a leading provider of professional lines insurance products and services that can accommodate medium and large organizations on an admitted and non-admitted basis. Through a single operating platform and a robust network of appointed wholesale and retail distribution partners, Argo Pro offers a broad, customizable portfolio of errors and omissions and management liability insurance solutions. Argo Pro maintains offices in Chicago, Jersey City, San Francisco, Scottsdale and Hamilton Township (New Jersey).

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