From La Brea to Boothbay Harbor, aviation claims department storerooms are bursting at the seams with all manner of drone rubble, accessories, parts and pieces.
Such is the reality and the aftermath of five years of insuring drones for hundreds of flights cut short by unforeseen (or some we suspect, foreseen) and unexpected incidents, accidents and crashes. And we’re not only talking about drone parts and components either. When UAS are insured for physical damage, the coverage often also extends to gimbals, payload and ground support equipment.
The insurance contract contains agreements between an insured and the insurance company that outline how a loss is handled. One of those agreements states that when the insurance company pays for the damage, they own the rubble also known as salvage.
Traditionally, insurance companies have turned to established salvage markets to sell or otherwise dispose of salvage. With rare exception, none of the aviation insurance salvage sites currently include any inventory of UAS or drone salvage for sale. In fact, only AIG’s includes any type of UAS salvage at all.
So how will insurance companies deal with the conundrum of insuring UAS for hull physical damage without having a means to recover some of their losses through the sale or disposal of the salvage?
One insurance company, Allianz, includes a coverage endorsement that gives the insured the first right of refusal to buy back their salvage. In other words, the adjuster will give the insured the option to make an offer on the salvage prior to the insurance company taking possession and disposing of it later. That endorsement and coverage has proven to be very popular since many insureds have a difficult time letting go of some payloads, particularly those that include proprietary or sensitive technology, and undamaged components such as ground support equipment. But that only goes so far. Not all will want to buy back
First and foremost, companies with a long aviation repair and service history like Robotic Skies, could be used to research and develop a “tagging system” for UAS. Robotic Skies could develop a system and standard means of testing and determining airworthiness of salvaged parts and components. From there, the serviceable components could be sent to the resale market through a central sales, bid or auction site and the remainder disposed of properly.
One other important area of concern are the batteries that go down with almost every crashed drone. We have a sneaking suspicion that those same overburdened insurance claim department storerooms have a damaged and leaking battery or two buried in the rubble. That is not only dangerous, it’s stupid. The ability to properly inspect, test and dispose of batteries takes special knowledge and experience. Companies with the knowledge and experience necessary to safely and responsibly deal with LiPo batteries, companies like Venom Power, could (must) be brought into the chain to assist with the testing, tagging, sale or disposal of the batteries.
It’s not often that an industry as large as the insurance industry has a problem of this magnitude without any type of solution in place to deal with it. But just because it’s not in place does not mean the solution does not exist.
Now is the time to develop, reuse, re-purpose and resell old UAS, damaged UAS, and salvage. As technology advances, the millions of UAS already in use, are going to need the parts a lot more than our landfills do. An Insurance UAS Salvage Certification and Sales System (IUSCSS) is good for everyone.
I love this guy. Terry Miller’s vast experience in aviation and UAS insurance fuels an unending series of ideas based on a deep understanding of the insurance business. He is always playing it forward.
This article reminds me of the keynote by Geoffrey Stewart from Amazon at Drone Dealer Expo. I wrote that “One of the more interesting moments came when Geoff said that they were looking for partners to handle refurbishing the returns. Sugar plum fairies definitely were out dancing as people contemplated just how many units a month that might entail, as well as the proffered resale opportunities.”
Whether you believe that there will be 600,000 commercial drones a year from now, or more or less, doesn’t make much difference. What goes up, often comes down and the high-end gear that Terry describes in the article will be worth something