High Costs Limits the Growth of the Drone Insurance Market

Mehmet Emre YAZICI

Independent Consultant, Aerospace Industry

Insurance companies have embraced drones for aerial data collection, catastrophe response, research and development, underwriting, and claims resolution support as early as 2015. Today, in a $14 billion global drone services market, insurance-related services have a decent share of approximately $2.5 billion (~17%). [1]

On the other hand, the global drone insurance market is expected to grow from $1.13 billion in 2021 to reach $1.41 billion in 2025 at a CAGR of 5%. [2] It is important to note that this is less than half of the expected combined annual growth rate (CAGR) of 12% in drone shipments for the same period (See chart below). [3]

Drone insurance is the insurance that covers the costs associated with accidental bodily harm or damage caused to property or any assets due to drone operations, as well as the cost associated with damage in drones.

As drones become more and more prominent, the risks of catastrophic crashes are increasing. Nevertheless, the high cost of drone insurance is hampering the growth of the drone insurance market. It may be estimated that drone insurance is reaching only 30% of its existing potential. [4]

Lately, the launch of different and innovative insurance products with hourly or per flight pricing is a major trend gaining popularity in the drone insurance market. Major companies operating in the sector are focusing on developing advanced solutions to attract drone operators.

People who compute insurance premium rates, dividends, risks, etc., based on statistical data are called actuarians. The lack of meaningful data to determine risks is the primary factor for them to come up with high premiums. In this context, insurance companies are offering major discounts to operators using proprietary or third-party analytics modules to share their flight data. The analysis of the data enables acturians to issue “safety scores” for each user so that the more you fly incident-free, the more discounts you receive on your premiums. [5]

But having no incidents and maintaining a no-claim history does not necessarily mean that you are flying safely. According to the FAA, the intent of drone operations is a decisive factor. If you deviate from the original intent it may indicate a risk factor. For example: if you have planned to fly at an altitude of 120 ft, but flew at 40 ft during most of your flight, this is a clear mismatch with your intent. If you maintain a similar attitude on consecutive flights, it becomes even more questionable. Why you insistently change your original plans needs to be clarified.

To properly tackle the problem of the high cost of drone insurance, a more comprehensive approach is required, where the planning, execution, and reporting of each flight are processed in an integrated manner akin to current aviation practices.

MaviKanatlar®, a drone-solutions start-up based in Turkey [6], approaches the issue from exactly this point of view by introducing an end-to-end system management approach based on the operational concept development experience of their founders in a variety of sectors.

Their debut product SeyirDefteri® (Flight Log), brings project management methodology to drone operations in a structured but user-friendly way. SeyirDefteri® does not only collect, keep, and process flight data but also relates it to the intent as well as the condition (sufficiency) of drones, payloads, and pilots. It ensures safe, compliant, and effective drone operations by providing planning, execution, and analysis tools at all phases of drone operations. 


Additionally, SeyirDefteri® enables drone operators of any size to perform fleet and inventory management, customer relations management, and document management activities over the same platform in an integrated manner. [7]

Insurance companies need comparative analysis tools that access not only the flight but also the payload, pilot, and maintenance data to analyze the intent vs the outcome of each and every mission to issue on-the-fly (pun intended) bespoke and cost-effective insurance policies to capture more from the market.

SeyirDefteri® generates precise and intelligible relational data for the whole operational life-cycle upon which the insurance companies can utilize to increase their market share.



[1] https://www2.deloitte.com/us/en/pages/financial-services/articles/infocus-drone-use-by-insurance-industry-flying-higher-farther.html

[2] https://finance.yahoo.com/news/drone-insurance-global-market-report-090000163.html

[3] This is a composite graph showing trends based upon data of different characteristics of the market by https://droneii.com/the-drone-market-size-2020-2025-5-key-takeawayshttps://www.statista.com/statistics/1234658/worldwide-consumer-drone-unit-shipments/https://pilotinstitute.com/drone-statistics/ and https://www.phillybyair.com/blog/drone-stats/

[4] As per drone shipment data above, almost 7,500,000 units exist globally today. With a yearly average of $500 for drone insurance, the “Total Addressable Drone Insurance Market” can be estimated as $3.75 billion.

[5] https://www.skywatch.ai/us/product

[6] https://www.mavikanatlar.net/tr

[7] https://seyirdefteri.online/