A working group set up by regulator IRDAI has recommended a broad policy framework and procedure for providing insurance cover to the drone industry and also suggested various risks associated with the use of Remotely Piloted Aircraft Systems (RPAS). The working group, set up by the Insurance Regulatory and Development Authority of India (IRDAI) in June to recommend suitable insurance products for drones, suggested various procedures to be followed and the documentation required in the event of a claim.
Among other things, the group in its report has come out with Specimen Policy Wording (Drone Insurance) which includes various definitions and covers various aspects, including legal liabilities to third party, drone hull cover, personal accident cover to operator, accidental medical cover to operator, general exclusions and general coverage. The panel noted that the drone ecosystem is in nascent stages in India and finding more usage/applications in various sectors at a slower pace.
World over drone is classified as an 'aircraft' and aviation regulators have stepped in to regulate the sector, though regulations for drone operations differ from country to country. In India, insurers have started using drones in crop cutting experiments and survey of industrial units for the purpose of granting property insurance programmes.
As per the report, 'drone insurance coverage' can be broken into three sets -- physical damage/loss to drone due to various contingencies, third party liability arising due to usage of drone, and any additional coverage. It has suggested cover for physical loss of or damage to the drone, inclusive of theft, occurring during the period of insurance and arising from the activities covered, whilst in flight, on the ground or in transit up to the insured value, less any applicable deductible.
In case of third party liability arising due to usage of drone, it has suggested "cover against legal liability (including defence costs) to pay damages, for third party civil claims arising out of bodily injury or death or property damage, by an accident or a handling error on part of the authorised operator", in accordance with the terms of the policy. On premium, the working group said pricing is strictly a domain of actuaries and regulations clearly entrust Appointed Actuaries of insurers with the responsibility to ensure that the product pricing is fair to all the stakeholders and the product will be financially viable.
"Hence the work group has no intention to suggest a particular price for the product recommended in this report and leaves the determination of price on each insurer's Appointed Actuary, in the context of data available with them, the assumptions taken, the underwriting and pricing philosophy of the company and the expense and profit loadings unique to that insurer," the report said. The panel has also proposed that on payment of additional premium, the policy could be extended to cover night flying.
Any authorised pilot operating a drone during the hours of darkness, must hold a valid permit or authorisation from the relevant governing aviation authority.
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