The Lloyd’s Market Association (LMA) is contributing to a European Commission study on third-party liability and insurance relating to the use of drones.

The full potential of remote piloted aircraft systems (RPAS) is only now being explored, with online retailer Amazon speculating they could even be used as personalised delivery systems for books and DVDs.

Drones’ ability to cover large areas and difficult terrain also makes them ideal for inspecting remote oil and gas pipelines and checking overhead power cables.

The study aims to consider all risks associated with the RPAS market, so appropriate regulation can be implemented.

The initial debate has focused on whether the current legislative framework is appropriate.

“Many of the existing liability regimes are based on aircraft weight, or passengers,” LMA Head of Underwriting Neil Smith said.

“This would be wholly incompatible with RPAS due to their much smaller size.

“The size of these craft also means new legislation could have a negative impact on the leisure radio-controlled model aircraft sector.”

The LMA recommends an industry-wide definition for drones, ensuring it excludes the leisure market.

It suggests licensing for operators due to the significant hazard, loss and third-party risk potential.

A system to identify drones and their operators would also be appropriate, so a drone can be traced should an incident occur.

It says each drone should be fitted with a unique transponder unit, making it visible and identifiable to air traffic control systems. A scheme for events involving uninsured RPAS operators may also be required.

Preliminary findings from the study will be reported later this month.