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Alifelong aviation enthusiast, Carson Lyons foresaw the burgeoning popularity of drones.
The Atlanta-based vice president and global product line manager of aerospace at American International Group Inc. knew his team would need to craft polices specific to using the unmanned aircraft systems, as the technology has rapidly gained a foothold in industries ranging from agriculture to energy to law enforcement to insurance claims.
“From an aviation standpoint, we understood that more uses of unmanned aircraft were coming forward,” Mr. Lyons said.
Accordingly, AIG's aerospace unit last year launched its stand-alone Unmanned Aircraft Insurance, which provides physical damage and third-party liability coverage tailored to the unique risks presented by the commercial use of drones, Mr. Lyons said.
Long before the Federal Aviation Administration issued its proposed rules for drones last month, the insurer relied on extensive dialogue with external and internal drone and aviation experts about the exposures resulting from the use of drones.
“We are ... constantly learning, but also being able to rely on decades of experience in aviation has allowed us to quickly adapt,” he said.
Recognizing similarities between manned and unmanned systems was essential, Mr. Lyons said.
For example, while losses arising from electronic malfunctions as well as failure of electronic components, accessories and power equipment supplies are excluded on standard manned aircraft policies, such coverage is standard on the Unmanned Aircraft Insurance policy covering drone operators.
Moreover, the policy broadens the definition of “operators” to include the pilot of the drone as well as ground crews by listing them as being covered by the policy.
“We had to evaluate the existing aerospace coverages and look at what might need to be altered to address the unique exposures that these aircraft represent,” he said.
In addition to its stand-alone policy, AIG also has an unmanned aircraft liability endorsement for its surplus lines insurer, Lexington Insurance Co. The endorsement to commercial general liability coverage is designed for unmanned aircraft weighing up to 5 pounds, with wingspans or combined rotor span of up to 3 feet. It also contains optional coverage, such as an electronic hijacking of the drone.
Mr. Lyons said given that unmanned aircraft are being used across industry sectors, versatility was a key consideration when devising the product, a 2015 winner of the Business Insurance Innovation Awards.
“The product is designed to adapt and grow as the industry does,” he said.