Drone Insurance Policy

Context: Recently, various companies such as HDFC Ergo, ICICI Lombard, Bajaj Allianz, and Tata AIG and public sector companies such as New India Assurance have launched its unmanned aircraft system insurance.

About Drone or Unmanned Aerial Vehicle:

• An unmanned aerial vehicle, commonly known as a drone, is an aircraft without any human pilot, crew or passengers on board.
• UAVs are a component of an unmanned aircraft system, which include additionally a ground-based controller and a system of communications with the UAV.
• Drones have been divided into five categories based on their weight (existing rules)-Nano : Less than or equal to 250 grams, Micro : From 250 grams to 2kg, Small : From 2 kg to 25kg, Medium : From 25kg to 150kg, Large : Greater than 150kg.

Drone market in India:

• India’s potential: Drones and allied component industries can boost India’s manufacturing potential by approximately $23 billion by 2030.
• Market size: India’s drone manufacturing industry crossed annual sales of Rs 60 crore in FY 2021 and is expected to grow to Rs 900 crore by FY 2024.

Highlights of the drone insurance policy:

• Regulation: Insurance players are now offering drone coverage within the framework set by the Insurance Regulatory and Development Authority of India (IRDAI).
• Participants: It will cover large aircraft to solo flying gliders and also, it will be offered to drone owners, operators, and manufacturers.
• Third-party liability coverage: It will cover legal liabilities like bodily damage or property damage claims to third parties arising out of the usage and operation of drones.
• Policy coverage: The policy covers physical damage to the aircraft and its theft.
• It also provides cover for accidental physical injury to the third party and/or damage to their property due to the aircraft’s operations.
  • It is designed to cover fixed wing, rotor wing and hybrid UAS that can be controlled remotely (with pilot intervention) or autonomous drones (without pilot intervention).
  • These aircraft are generally deployed for military and non-military applications, including surveillance, geography and infrastructure inspections and aerial photography.
  • It will provide coverage for the replacement or repair, accidental loss of or damage to the UAS arising from the risks covered, including disappearance if the UAS is unreported after the commencement of Flight.

Regulations in the sector:

• Flying drones has been legalised in India since 2018. However, individuals need to take prior permission from civil aviation regulator DGCA to fly these remote-piloted aircraft.
• Nano drones, weighing less than 250 grams, have a permit exemption, subject to the condition they are flown at an altitude below 50 feet.
• The Director General of Civil Aviation (DGCA) initially offered coverage to drones within a visual line of sight (VLOS) and during the day.
• Later on the DGCA changed the guidelines to offer coverage beyond VLOS.
• DGCA mandates third-party liability insurance for all drone operators.
• Except in the nano category and micro category only for non-commercial use, all drone activities must be done only after receiving prior approval from the Digital Sky online platform for a flight or series of flights.
• Globally regulation: drones are classified as aircraft and aviation regulators have already stepped in to regulate the sector.
• The Government of India has brought in policies (Drone Policy 1.0 in 2018 and Drone Policy 2.0 in 2019) which made the DGCA to come out with Regulations Civil Aviation Regulation CAR 1.0 in 2018 and Draft Unmanned Aerial Vehicle Systems, 2020.

Application Areas of Drones:

• Aerial Photography: Drones are now being used to capture footage that would otherwise require expensive helicopters and cranes.
• Shipping And Delivery: Major companies like Amazon, UPS, and DHL are in favour of drone delivery.
  • Drones could save a lot of manpower and shift unnecessary road traffic to the sky. Recently Vaccines were delivered through drones.
• Search And Rescue: Presence of thermal sensors gives drones night vision and makes them a powerful tool for surveillance.
  • Drones are able to discover the location of lost persons and unfortunate victims, especially in harsh conditions or challenging terrains.
• Weather Forecast: Drones are being developed to monitor dangerous and unpredictable weather.
  • Since they are cheap and unmanned, drones can be sent into hurricanes and tornadoes, so that scientists and weather forecasters acquire new insights into their behavior and trajectory.
• Disaster Management: Drones provide quick means, after a natural or man-made disaster, to gather information and navigate debris and rubble to look for injured victims.
  • Its high definition cameras, sensors, radars and small size give rescue teams access to a higher field of view
• Precision Agriculture: The infrared sensors in drones can be tuned to detect crop health, enabling farmers to react and improve crop conditions locally, with inputs of fertilizer or insecticides.
• Geographic Mapping: Available to amateurs and professionals, drones can acquire very high-resolution data and download imagery in difficult to reach locations like coastlines, mountaintops, and islands.
• Law Enforcement: Drones are also used for maintaining the law. They help with the surveillance of large crowds and ensure public safety.

Risks associated with drone’s technology:

• The expected rise in the use of drones or unmanned aerial vehicles (UAVs) for a host of different applications may leave operators exposed to a whole new set of risks, including third-party damage or injury and liability.
• One of the biggest risks, it said, was from radio frequency interference, resulting in loss of control, and, in the worst cases, fatalities.
• With the ability to collect massive amounts of unsolicited data, UAVs present an enormous threat to individual privacy and a significant challenge for insurance carriers,
• The issue is the application of these vehicles in urban areas where the risk of damage to properties and individuals is much greater than it would be in rural parts.
• Use of drones by terrorists causes a disproportionate psychological effect on people as well as on security personnel.
  • Example recent attack on India’s air force station in Jammu.

Way Forward:

In order to achieve Atmanirbharta in the manufacturing sector there is a need for innovative and competitive manufacturing capabilities and a strong action plan to help India become a global hub for drone manufacturing by 2030. Need of the hour is to generate a strong demand, increasing manufacturing, drawing investments and facilitating exports. The government is carving out drone corridors to facilitate delivery of cargo deliveries.

About Insurance Regulatory and Development Authority of India (IRDAI):

• The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous and statutory body which is responsible for managing and regulating insurance and re-insurance industry in India.
• IRDAI is a 10-member body-
  • a chairman,
  • five full-time members and
  • four part-time members.
• It was constituted under an Act of Parliament in 1999.
• Headquarters:
• Role:
  • It has to protect the interests of insurance policy holders and ensure that they are treated in a just manner.
  • It also has to monitor policy issuers to ensure that the common man’s interests are not subverted.

Source: Indian Express