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Insurance risks as business case for drones takes flight

Insurance risks as business case for drones takes flight
Neesa Moodley
By Neesa Moodley
13 May 2024
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The research firm Industry ARC estimates that the South African small drone market will be worth $134.5-million (R2.5-billion) by next year.

From starting life as a military apparatus to being viewed as a novelty toy for boys (young and old), the small drone market has rapidly expanded to other uses, including agriculture. 

Tech-savvy farmers are using drones for everything from spraying fertiliser on crops to monitoring and counting livestock. iTOO aviation underwriter Lorenzio Bettini said one of the bigger trends in the aviation industry currently was the increased use of drones for security, data analytics in surveillance and the delivery of goods. 

The research firm Industry ARC estimates that the South African small drone market will be worth $134.5-million (R2.5-billion) by next year. 

James Godden, the aviation manager at Santam, said that when it comes to farm irrigation, echoing and lasers allow drones to adjust altitude as the topography and geography vary, and avoid collisions. 

“Consequently, drones can scan the ground and spray the correct amount of liquid, modulating distance from the ground for even coverage. They’re also used for monitoring and irrigation, revealing production inefficiencies through imaging and enabling better crop management and irrigation,” he said. 

However, with drones set to play a bigger role in businesses such as logistics, filmmaking, search and rescue, and mining and quarrying, Godden said businesses and individuals needed to be more aware of the regulations and associated insurance risks. 

Businesses were waking up to the benefits of including drones in their operations, he explained. 

“Drones are expected to play a significant role in cargo transport and delivery in the near future, as they will be able to deliver packages to homes. They have also featured in commercial filmmaking, search and rescue, mining and quarrying, conservation, and much more.” 

The insurance risk associated with drones


Godden said drones could potentially harm property and even people. “Given their remote nature, they’re vulnerable to theft, which also poses a cybersecurity risk due to the data they carry. Drones are at the mercy of those who operate them and are thus susceptible to human error, as well as ethical and social risks. 

“Drones are also pricey, which presents the risk of financial loss should damage or theft occur,” he said. While personal drones retail for between R3,000 and R50,000, professional drones can set a business owner back by R350,000 to R1-million.   

Legislation governing the use of drones


The South African Civil Aviation Authority (SACAA) defines operational drones as aircraft, which means they fall under laws similar to those of manned aircraft. 

For commercial use, these laws include:

  • A commercial drone pilot needs to get his or her remote pilot licence as a starting point, followed by an air service licence (from the Department of Transport) and a remotely piloted aircraft operator’s certificate (from the SACAA);

  • A drone may not be flown within a 10km radius of an airport, airstrip or helipad;

  • Drones must be operated in daylight and clear weather conditions;

  • A drone may not be flown by an intoxicated individual; and

  • A drone may not be flown within a 50m radius of any person, property or public road.


iTOO’s drone insurance is only available to registered drones operated by qualified drone pilots. Some of the requirements to obtain a remote pilot’s licence include passing a medical exam, getting a radio telephony licence, passing theory and practical exams and proficiency in English so you can comply with international air control standards. You must be at least 18 years old to get a remote pilot’s licence. 

Santam’s drone cover falls under its aviation cover, and includes third-party cover. The insurer currently covers about 500 to 600 clients across the commercial and personal segments. 

Claims involving drones


Godden said that in addition to theft out of motor vehicle risk, drones were prone to attacks by birds such as yellow-billed kites.

“One of the strangest stories I have heard about drones was where a couple was using a drone to film their engagement out at sea. The drone was then attacked by seagulls and fell into the ocean. It ended up surrounded by dead seagulls and then the horrified couple watched as a shark approached and started eating the seagulls!” 

Read more in Daily Maverick: Up in the air — drone fishing spins a tangled nest of legal, ethical and conservation dilemmas

In an actual claim Santam had to deal with, the aggrieved party said they were driving when they were distracted by a drone and ended up in an accident. In this case, the person in the car claimed damages from the owner of the drone. 

The process of claiming for drone insurance is a bit different from your typical accident claim. iTOO, for example, requires you to take a photo of the damaged drone or appoint an aviation investigator if your drone gets lost. You need to submit information including logbooks and wind conditions. And as per the law, your insurer has to enlist the help of the SACAA for the investigation and compilation of a report for your claim. DM

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