The Canadian government has made it clear that, as far as commercial drones are concerned, Canada is open for business.  In the US, the Federal Aviation Agency has granted only 69 authorizations for commercial drone use, compared to 1,600 authorizations issued by Transport Canada in 2014 alone (although recently the FAA has begun to clarify its regulations and grant waivers for specific commercial uses).   In comparison, more than 100 companies are offering commercial drone services in Canada.

The Transport Canada rules require that a Special Flight Operation Certificate (SFOC) be secured prior to operating a commercial drone in Canada.  Furthermore, commercial operators must have $100,000 of liability insurance in place, regardless of the size of the drone and its use.

This direct approach to regulation has led to two developments within the insurance industry in Canada.  First, insurers in Canada, as in the US, have introduced products aimed at covering actual drone usage – including liability coverage as well as coverage for damage to the drones themselves.  Second, insurers are working hard to incorporate data received from drones into their models for risk assessment and mitigation, in areas ranging from claims to oil and gas pipeline maintenance, crop insurance, and the upkeep of roads and railroads.   Insurers are doing the same in the US but the many drone services already operating in Canada are providing a wealth of data.

It is not clear yet whether drone insurance will become a specialty product offered by aviation insurers or a more general product offered by property and casualty insurers.  What is clear, however, is that drone use is growing rapidly and that both general and specialized insurers need to be thinking about how to use the vast quantities of video and other data provided by commercial drones.

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