When the new Small UAS rules eventually go into effect, they will forego the restrictive and comprehensive approach to regulating air commerce that applies to other types of commercial air operations. Instead, the new Part 107 will follow what is commonly referred to as a “risk based” approach. Aviation risks will not be managed by strict requirements for aircraft, pilot, and operator certification. In fact, there will be virtually no standards whatsoever for the aircraft themselves, and while the pilot’s certificate will require passing a written test, there is no requirement for the equivalent of a “road test” to demonstrate actual flight proficiency.

While this light-handed approach will allow maximum commercial exploitation and technological development, it shifts virtually all of the safety burden onto the manufacturer and the UAS flyer. This type of system will work well when the UAS community is made up of sophisticated operators who have the experience and knowledge to understand the risks. Unfortunately, because the barriers to entry into the market are so low, there is no guarantee that the bulk of operators will be up to the challenge.

One possible remedy for this problem may be to follow the approach taken in Canada, and require that all commercial UAS operators have some form of liability insurance. Even Canadian operators working under the blanket exemptions issued last year, who have virtually no oversight by Transport Canada, must have insurance:

Any person conducting operations under this exemption shall subscribe for liability insurance covering risks of public liability at the levels described in subsection 606.02 (8) of the Canadian Aviation Regulations and in any case shall have no less than $100,000 in liability insurance coverage pertaining to the operation of the UAV.

This system has several advantages.  First, it ensures there are adequate funds available to compensate for any likely harm in the event of an accident.  Even more importantly, it requires operators to think in a serious way about risk, while giving them a knowledgeable ally to manage those risks.

Most people probably assume that aviation insurers and brokers arrange for coverage and then sit by the phone waiting for an accident.  In reality, a key component of the insurance industry is risk management.  Specialty aviation insurers routinely provide assistance to air carriers to help them improve safety.  Today, the liability insurers who are writing UAS policies probably have a better understanding than most about what the real world likelihood of an accident is and the potential cost, because they are the ones collecting the data as claims are made.  Armed with this information, insurers are in a position to help operators mitigate risks.

The FAA’s “risk based” approach to UAS regulation may be one that will work for the industry.  One of the best ways to ensure that it does work, is to fully engage that portion of the market that is focused every day on risk management and loss, the insurance industry.