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Public sector scrambling to keep up with burgeoning drone market

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ATLANTA — The use of drones is forecast to mushroom in the coming years, a panel of analysts said recently, and public entities need to get their policies in order before then.

Public entities such as publically funded universities, law enforcement, fire departments and other government agencies have been using drones for tasks including monitoring and surveillance, imaging and data recording and delivery of relief supplies.

“Drones are not toys,” Benjamin Eggert, a partner with Wiley Rein L.L.P. in Washington, said during last week's Public Risk Management Association's Annual Conference in Atlanta. “They've become ubiquitous. You can buy one on Amazon for $100. But the liability situations and the insurance implications are pretty profound. So make sure everybody knows the baseline policy should be that drones should not be used at all absent having specific authorization internally to do so.”

Public entities may apply for a Certificate of Waiver or Authorization from the Federal Aviation Administration to use drones or small unmanned aircraft systems.

Mr. Eggert stressed that having a written set of rules for the use of drones is critical, noting that “a lot of drone use seems to be happening on an ad hoc basis.”

“Anything any of us say today may not be a true statement in a month, a week, or year,” he said. “Nobody, I think, predicted that the cost of drones was going to plummet so rapidly to make them accessible basically for any municipality or any person to get them. The capabilities of what these things can do and how they can encroach in different areas of our lives has far eclipsed the ability of bodies designed to regulate (them).”

Rulemaking a 'moving target'

Mr. Eggert added that some state and local governments have been creating their own rules for the use of drones and “some of these rules don't always stack up with each other.”

“I think the usage is going to mushroom,” said fellow panelist Sarah Perry, risk manager for Columbia, Missouri. “It's just going to increase as there become more and more opportunities. One of the big areas is figuring out what you have, how they're being used and whether you're following the regulations.”

In February 2015, the FAA released its Notice of Proposed Rulemaking for small, unmanned aircraft. In January, FAA Administrator Michael Huerta said the agency intended to issue the final rules by “late spring.” Last month, Mr. Huerta said the FAA was setting up a committee to advise on unmanned aircraft issues.

“I think the FAA is genuinely trying to come out with rules that make use of drones not only possible, but productive,” said Gerard Finley, senior vice president for casualty treaty underwriting at Munich Reinsurance America Inc. “They are taking their time; they are doing a lot of research. As they're doing this, the technology is evolving as well, so it's very much a moving target.”

Mr. Finley said municipalities also have to decide whether they want to own drones or hire an outside operator to handle drones for them. If a municipality decides to own a drone, it will face liability exposure and other issues.

If the municipality hires an outside operator, Mr. Finley advised to “push as hard as possible to hold you harmless and to add you as additional insured to their policy since they're the experts in operating drones.”