Law firm Clyde & Co says “significant emerging” opportunities lie in store for insurers as commercial uses of drones, known also as unmanned aerial vehicles (UAVs), rise in Australia and globally.

Drones are now widely used in sectors such as logistics, mining, geological survey activities, and aerial photography.

Their deployment in areas like law enforcement, search and rescue and emergency relief is evolving very rapidly as well.

“Insurance is vital in this new global market with the ongoing development of insurance products by insurers playing and continuing to play a pivotal role in understanding and mitigating the risks associated with drone operations,” Partner Maurice Thompson and Senior Consultant Tony Tarr said in a joint commentary provided to insuranceNEWS.com.au.

“The key insurable risks for drones are first party loss including damage to drones and accessories, and third-party liability for personal injury and property damage.

“However, the operation of drones also has some novel risks – some already in existence and some emerging – which include, for example, nuisance, harassment, trespass, cybersecurity and breach of privacy risks.”

Their commentary follows an announcement from Clyde & Co that its experts have co-authored a book on drones and what increased commercial deployment of UAVs means for stakeholders including the insurance industry.

The law firm says the book, titled Drone Law and Policy, outlines the current and proposed regulatory framework in Australia, the US and the UK, taking into consideration the current and evolving technological and insurance landscape.

The book also makes recommendations in relation to additional regulatory and insurance initiatives needed to achieve an effective balance between the various competing interests.

Key topics covered in the book include cyber risks, standards and insurance, terrorism and security as well as airport and aircraft safety.

Clyde & Co says the book is a reference and expert guide for regulators and government agencies, legal practitioners, insurance companies and brokers globally, as well as for major organisations utilising drones in industrial applications.

In a recent Asia Pacific market insight report, Clyde & Co says the regulatory framework is struggling to keep pace with growing novel uses of drones, raising concerns about the insurability of these exposures.

The report says the drone insurance market is also a complex and evolving space.

“In addition to developing bespoke indemnity products, insurers are also making use of innovative solutions such as on-demand cover and policy add-ons or write-backs for drone exposures,” the report said.

“The growth of drone use will necessitate a more diverse range of products to cover all eventualities, with Big Data set to play a central role in both the pricing of coverage and modelling of exposures.”

The report says in Australia and New Zealand, drone operators are not at present required to take-out third-party liability insurance, but such cover is strongly recommended.

The report highlights potential legal implications, such as litigation resulting from drone accidents to consider, whether for property damage or personal injury.

It says the privacy implications of increasing drone use further complicate their regulation.

“With many drones equipped with cameras, and more advanced models able to incorporate facial recognition software, thermal imaging cameras, and wi-fi antennae to track mobile telephones, law enforcement use of drones could prove to be more intrusive than existing CCTV camera networks,” the report said.