Civilian Use of Drones in the EU - European Union Committee Contents


195.  The Commission's Communication recognises that, despite efforts to ensure all RPAS operations are safe, accidents can happen, and victims must have access to adequate compensation.

196.  At present, EU Regulation 785/2004 describes the insurance obligations for all aircraft operators. It requires that all commercial RPAS operations purchase third party liability insurance.[252] The Regulation defines limits for the minimum amount of third party liability insurance required based on the mass of the aircraft on take-off. For RPAS weighing less than 500kg the minimum cover required is approximately €660,000.[253] Model aircraft, including RPAS for leisure use, weighing less than 20kg are not required to have third party liability insurance.

197.  The Communication outlines the Commission's plans to assess whether existing third party liability requirements for manned aviation, under EU Regulation 785/2004, are appropriate for RPAS. In 2014, the Commission contracted transport consultancy Steer Davies Gleave to carry out research into the applicability of the existing Regulation for RPAS. Steer Davies Gleave found that there was no uniformity in Europe or more widely regarding the application of third party liability to aviation. Some Member States followed a strict liability regime (where the aviation company was automatically liable for any damage without there being the need to attribute a fault); others carried out a fault-based analysis on a case-by-case basis. It suggested that there was no appetite in the aviation sector to rectify these discrepancies which tended to be smoothed over in practice, and so they were likely to be carried through into RPAS insurance.[254] This view was supported by Bird and Bird LLP, which said that there was little appetite for a formal liability regime: "the incidence of aircraft accidents causing surface casualties is low and there are few if any incidents of surface victims of a material accident going uncompensated."[255]

Exemption for model aircraft users

198.  Concern was expressed about the exemption in EU Regulation 785/2004 for model aircraft weighing less than 20kg. The distinction between commercial, model and leisure users, upon which the rules in EU Regulation 785/2004 on liability are based, is no longer clear-cut: the same equipment, presenting essentially similar risks, may be used equally by all these groups. Mr Heath, of John Heath Insurance Brokers LLP, a company offering third party liability insurance to small RPAS operators, noted that existing insurance legislation relied wholly on "the status of the operator, not the platform they are using."[256] Mr Phippard, of Bird and Bird LPP, added: "the risk to the public is really no different if this 10kg vehicle is being flown in the park by a child or used for survey purposes."[257]

199.  BALPA and Alvarez and Marsal, a professional services consultancy, both recommended removing completely the exemption for model aircraft, including RPAS, from the requirement for third party liability insurance.[258] Alvarez and Marsal suggested that a mandatory insurance regime for all RPAS could be implemented through "a form of registration, as is required on light aircraft today … and such registration would only be possible with the correct risk training and insurance cover in place".[259]

200.  Although the British Model Flying Association shared the concerns described above, it argued that ensuring that all RPAS owners had adequate insurance was "difficult to address at any meaningful level."[260] Mr Corbett, CAA, said:

    "it is about proportionality … It is difficult, but we have to get a handle on where the risk is and where the potential for damage is. If we tie it up to such an extent and require insurance for everybody who has even a small aircraft that fits in your hand, for example, I do not think we would be able to manage that appropriately".[261]

201.  While similar equipment may be used by both leisure and commercial RPAS pilots, introducing mandatory third party liability insurance for the leisure use of RPAS would be disproportionate to the hazard posed by such users.

Cost of third party liability insurance

202.  A number of commercial RPAS operators and ancillary businesses noted the high cost and difficulty of purchasing insurance for third party liability. Resource Group Limited said that "the cost to insure a small unmanned surveillance aircraft (SUSA) is almost twice that of insuring a standard family car."[262] In a joint submission, ARPAS-UK and the UAV SIG of RSPSoc said: "the insurance market for UK SMEs is currently restricted to a few providers and we would welcome greater competition in this area."[263]

203.  On the other hand, the Royal Aeronautical Society and English Heritage suggested that this was already happening and that businesses were responding to the demand for insurance.[264] The Royal Aeronautical Society said insurers "have invested time in understanding the risks involved in operating UA and have spent considerable time understanding the mechanics and properties of UA themselves." It accepted that "this is a relatively immature technology, [and]; the premiums can be expensive", but believed this would change "as confidence grows with use."[265]

204.  Lack of information regarding the risks associated with RPAS partly explained the high cost of premiums for RPAS businesses. Alvarez and Marsal said companies offering bespoke insurance for commercial RPAS businesses "are the exception rather than the norm and they are expensive in premium terms because it is impossible, in the early days of the product and without any real risk data, to truly rate the risk."[266] The lack of information regarding the risks present in RPAS operations also raised questions about the quality of insurance products already in use. EuroUSC said that its own database on safety, collated from reports from over 1,000 companies, suggested that "regulators and underwriters are underestimating future risk", and that "the probability data is based on many false assumptions".[267]

205.  At present information is gradually being collated by insurance companies. Mr Heath said that his company's premiums were calculated according to whether the pilot had received permission to fly from the CAA, completed pilot training, the value of their equipment, the total flying hours to date, and the level of liability required.[268] His business kept a record of accidents, detailing types and models of aircraft, in order to identify trends and compare risks, but he was reluctant to share this information for commercial reasons.[269] In order to generate shared knowledge of the risks involved in RPAS operations, Steer Davies Gleave said in its report to the Commission that national aviation authorities should improve the data collected on RPAS operations and accidents and share this information with insurers and operators.[270]

206.  The Commission hoped that the cost of premiums would fall following the introduction of clear safety regulations governing commercial RPAS flights.[271] Resource Group Ltd said that insurance companies should have "a price scaler where premiums are reduced subject to [a] number of demonstrated safety processes", similar to a 'no claims' bonus.[272]

207.  In order to improve the information used to determine third party liability premiums, we recommend that any future EU legislation governing RPAS operations should require national aviation authorities to share statistics regarding RPAS incidents with regulators, insurers and operators in other Member States.


208.  The cost of insurance premiums could also fall in response to growing demand from operators. However, increased demand would only lower premiums if commercial pilots complied with their obligation to purchase third party liability insurance. AM-UAS Ltd said that demand for third party liability insurance was already being affected by its cost because new pilots took the risk of not being insured, "in order to become a part of a fast growing and exciting market."[273] Blue Bear Systems Research Ltd said that commercial pilots failing to take out adequate insurance meant that "ultimately this will increase overall industry costs rather than the risk being shared throughout".[274] The high cost of premiums had also incentivised the creation of cheaper insurance products which excluded third party liability cover altogether. Alvarez and Marsal suggested that these products were more attractive to start-up companies and hobbyist associations, but that they were unlikely to stand the test of a significant incident or claim.[275]

209.  In order for EU Regulation 785/2004 to be effective, and for the cost of premiums to reflect growing demand from pilots, more needs to be done to ensure that commercial pilots are aware of their legal obligation to purchase third liability insurance. Mr Heath said that although "there is an awareness amongst many that insurance is required, but there are also an equal number who are not aware".[276] While Bird and Bird LLP said that trade and model aircraft associations played an important role in informing members, Mr Lee suggested that the CAA also needed to reach out to prospective users and the public to explain RPAS regulations.[277]

210.  While raising awareness should deliver some benefits, witnesses were clear that commercial pilots without the requisite insurance should not be allowed to operate. Bird and Bird LLP noted that Member States were obliged under EU Regulation 785/2004 to ensure that their pilots complied with the insurance requirement.[278] Mr Corbett said that the CAA "expect people to have appropriate cover against third-party risks when we issue permissions."[279]

211.  Compliance with EU Regulation 785/2004 could be improved if confusion regarding its scope was removed. Bird and Bird LLP said that the applicability of EU Regulation 785/2004 to RPAS could be clarified by providing a revised definition of model aircraft, in line with a suggestion made in an EASA working group. This would define model aircraft as those used "exclusively for air display, recreational, sport or competition activity". It continued: "Such terminology would have the effect of requiring all commercial operations to be insured, regardless of weight, and reduce significantly any confusion which currently exists as to the scope of the insurance obligation."[280]

212.  This would also serve to give assurance to operators that their insurance was adequate. Mr Meuleman said that confusion existed as to whether European law required specific third party liability insurance for RPAS: "An issue that could be clarified is the extent to which European law … as the regulation on insurance requirements for air carriers and aircraft operators—applies here."[281]

213.  The cost of third party liability insurance premiums is likely to decrease with greater demand from RPAS pilots. We therefore recommend that trade associations and national aviation authorities raise awareness of and enforce commercial RPAS pilots' obligations under EU Regulation 785/2004 to purchase insurance. This will reduce the number of operators running the risk of not taking out insurance and encourage a safer RPAS industry.

214.  To address confusion regarding the scope and applicability of EU Regulation 785/2004, we recommend that the Commission brings forward amendments that would clarify that the legal requirement to purchase public liability insurance depends on whether the RPAS is being used for hobbyist or commercial use.

Minimum liability limit under EU Regulation 785/2004

215.  Some witnesses considered that the minimum limit for third party liability insurance for commercial RPAS below 500kg of approximately €660,000 was insufficient. Mr Heath said that his business did not offer insurance products totalling less than £2 million.[282] The British Model Flying Association said that it "takes a strong stance on insurance hence the provision of £25 million of public liability cover as standard to all members."[283] Simon Phippard, of Bird and Bird LLP, said that if an RPAS pilot caused a major air accident but was only insured for the minimum amount, then "There is not enough insurance, ultimately, for it all to come back through that operator". He added: "the airline would handle the issue in the first place, as well as their insurers, and there would be sufficient cover at least for the passenger claims to be resolved."[284]

216.  Thales UK noted that the current limit stemmed from aviation regulations, which were written by reference to the weight of an aircraft.[285] As it stands, the Regulation requires the same minimum amount of third party liability cover for RPAS weighing 500kg or 1kg. As discussed earlier in this report, the Commission is moving towards adopting a proportionate approach to risk for RPAS safety regulations. Such an approach would consider factors in addition to weight, including whether operations will take place in congested or rural areas.

217.  In line with a risk-based approach to RPAS safety regulations, we recommend that the Commission increases the minimum amount of public liability cover required by commercial RPAS operators under EU Regulation 785/2004. The Regulation currently stipulates a minimum amount of €660,000 for all commercial RPAS weighing up to 500kg.

252   Regulation (EC) No 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators. Back

253    Q138. This is approximately equivalent to 750,000 Special Drawing Rights  Back

254   Steer Davies Gleave, A Study on the Third Party Liability and Insurance of Remotely Piloted Aircraft Systems (RPAS), (November 2014) pp 1-2: [accessed on 26 February 2015] Back

255   Written evidence from Bird and Bird LLP (RPA0027) Back

256    Q136  Back

257   Q140 Back

258   Written evidence from BALPA (RPA0031) and Alvarez and Marsal (RPA0044) Back

259   Written evidence from Alvarez and Marsal (RPA0044) Back

260   Written evidence from British Model Flying Association (RPA0043)  Back

261    Q23 Back

262   Written evidence from Resource Group Ltd (RPA0009) Back

263   Written evidence from ARPAS-UK and UAV Sig of RSPSoc (RPA0005) Back

264   Written evidence from Royal Aeronautical Society (RPA0018) and English Heritage (RPA0007) Back

265   Written evidence from Royal Aeronautical Society (RPA0018) Back

266   Written evidence from Alvarez and Marsal (RPA0044) Back

267   Written evidence from EuroUSC (RPA0037) Back

268    Q141  Back

269    QQ144, 146 Back

270   Steer Davies Gleave, A Study on the Third Party Liability and Insurance of Remotely Piloted Aircraft Systems (RPAS) (November 2014) p 4: [accessed on 26 February 2015] Back

271    Q94 Back

272   Written evidence from Resource Group Ltd (RPA0049) Back

273   Written evidence from AM-UAS Ltd (RPA0006) Back

274   Written evidence from Blue Bear Systems Research Ltd (RPA0023) Back

275   Written evidence from Alvarez and Marsal (RPA0044) Back

276    Q140 Back

277   Written evidence from Bird and Bird LLP (RPA0027) and Peter Lee (RPA0040) Back

278   Written evidence from Bird and Bird LLP (RPA0027) Back

279    Q23 Back

280   Written evidence from Bird and Bird LLP (RPA0027) Back

281    Q117 Back

282    QQ136-138  Back

283   Written evidence from the British Model Flying Association (RPA0043) Back

284    Q146 Back

285   Written evidence from Thales UK (RPA0030) Back

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