The meteoritic rise in the use of unmanned flying drones present challenges and opportunities for insurers, according to Marsh.

In its report, “Dawning of the Drones: The Evolving Risk of Unmanned Aerial Systems”, the insurance broking and risk management firm noted that while insurance capacity for drone operations is plentiful, expertise and historical data is not so abundant.

“Insurers are eagerly testing the waters of this dynamic industry. To do this, they are using their experience of the manned class to assess the risk and limiting their exposure by selection of size, uses, and values of the aircraft. or the type of coverage offered,” said the report.

This year it is estimated that more than one million drones will be operated commercially, and in 10 years’ time approximately 10 per cent of global civil aviation fleet will be unmanned.

Global spending on drones is expected to be around $40 billion this year, and projected to exceed $100 billion by 2030.

The largest growth area in coming years is expected to be for visual line of sight (VLOS) drones, particularly for carrying unmanned cargo, that require up to $1 million physical loss sums insured.

Marsh pinpointed a number of key areas for consideration by insurers regarding drones, one being the size and weight of the aircraft and its payload.

The report said smaller rotary-wing drones used for survey work and photography might have equipment slung under the aircraft that is of a much higher value than the drone itself, a consideration an insurer would need to be aware.

The main growth area for drones is in machines costing less than $250,000, which are usually small and highly portable — therefore making them easier targets for theft. This risk is compounded by many of the aircraft not carrying airframe numbers or serial numbers on their interchangeable components.

Marsh noted that the high number of companies manufacturing drones to meet the growth in demand would likely lead to some models becoming obsolete, and that could result in a low-damage accident by such a machine turning into a potential “total constructive loss in financial terms” because of the difficulty sourcing replacement parts.

Other issues insurers will need to deal with are the likely broad use of drones, potential breach of privacy liability, and the risk of posed by hackers gaining access to drones that fly below the 400ft banding and using radio wavelengths shared by many broadband and Wifi devices.

In conclusion, the report said: “The insurance sector has responded positively to this nascent industry, with some insurers being so proactive as to write their own safety rules to fill the gap left by regulators.”

It added: “Presently, there are insufficient precedents set in terms of claims and education to enable underwriters to accurately assess the risks involved in UAS (unmanned aerial systems) operations. However, with time, this data will eventually be generated (beyond the collation of data surrounding these machines and their performance reliability) the hard way, albeit at the smaller end of the scale.”