Demand for drone coverage slow to get off the ground

SALES OF DRONES have been soaring over the past year but insurance demand and regulations for them have been slow to get off the ground in Canada.
Zurich Canada has been offering coverage for commercial drones — also known as unmanned aerial vehicles — for a year now and Intact Insurance introduced a policy for small and medium-sized businesses in January.
Intact said it identified a growing customer demand and a gap in non-specialty markets for UAV coverage.
Insurance broker Brent MacLachlan of HMS Insurance and Financial Services in Parkhill, Ont. told Thompson’s his firm has received a lot of inquiries but has sold just 12 policies for UAVs so far.
He said some customers are turned off by the price because some are just looking to buy coverage for personal use.
“People are buying drones for personal use but I’m not able to sell drone insurance for personal use,” he said. “I don’t know any insurers that are selling it for only personal use and I think there is a need for it.”
Commercial UAV policies cost around $800 a year, which Mr. MacLachlan noted “is a lot for taking a few pictures here and there.”
He noted consumer interest has been sparked somewhat by blog posts on social media.
Kitchener, Ont. brokerage Erb and Erb Insurance has also been offering UAV coverage and partner Michael Brattman said he has had similar experiences.
“It’s still relatively new and people often wanting to get into this space see the price and rethink their business model,” Mr. Brattman said.
“We are big on social media and this is an area where we are seeing more and more interest.”
Since October, Erb and Erb has sold about 50 UAV policies, with roughly one client a day making an inquiry.
“We are seeing a trend and people are thinking about these things,” Mr. Brattman said. “It gets back to educating customers and letting them know there is a gap and they need to be thinking about coverage.”
Amanda Dean, Atlantic vp at the Insurance Bureau of Canada, said insurance offerings and take-up will only grow as the popularity of UAVs continues to surge.
“Coverage is needed in the sense that customers are using these devices and there is a liability risk. Clearly there is a customer demand and it requires innovation on behalf of the insurers.”
Pat Van Bakel, president and ceo of Crawford and Company Canada, said the claims specialist has been working towards using UAVs for adjusting purposes.
“We have a project around it but we have lots to do to make sure we have managed the risk,” he said.
He said he believes Transport Canada’s current minimum liability insurance requirement is far too low.
Regulations currently require $100,000 in liability coverage for commercial UAVs.
“Our view is that the requirements are so minimal it would be inadequate, we suggest a minimum of $5m coverage.”
To operate a UAV heavier than 25 kilograms or for commercial or research purposes in Canada, operators must obtain a special flight operations certificate from Transport Canada. Safety guidelines also prohibit flying drones near airports, buildings, populated areas or moving vehicles. Transport Canada has been working for the past year to develop recommendations for regulation of UAVs.