South Africa’s drone market is taking off – how is the insurance market responding?

South Africa’s drone market is taking off – how is the insurance market responding?

From mines, to crop dusting to anti-poaching, South Africa is at the vanguard of commercial drone application, plotting a greener course for aviation, as Lara Vivier, McLarens Aviation, drone surveyor and technical support, South Africa, explains

The drone industry is one of the fastest-growing industries in the world. With greener credentials than fuel, battery-operated drones offer a more efficient use of aircraft, holding the potential to change the way we travel, conduct business, and even inform the type of sport we participate in.

Lara Vivier, drone surveyor, McLarens Aviation

Lara Vivier, drone surveyor, McLarens Aviation

According to Drone Industry Insights (a leading online drone market research and analytics organisation), the global drone market size is forecast to reach $41.3bn by 2026 at a Compound Annual Growth Rate (CAGR) of 9.4%. The unmanned aerial vehicle (UAV) market has been classified into military, commercial, government and law enforcement, and consumer segments.

South Africa is one market leading the way, deploying drones for diverse operations such as crop spraying, inspections, search and rescue, forest fire detection, photography, videography, security and surveillance and mapping – among others.

Manufacturers have produced different types of drones according to the industry demands, such as multi-rotor drones, fixed-wing drones, single-rotor helicopter drones, fixed-wing hybrid VTOL drones, small drones, micro drones, tactical drones and large combat drones.

In light of the rapid developments to date, experts in the aviation industry are excited to see what the future holds for South Africa. There are currently 85 registered drone operators in the country, with most focusing on operations in the security, surveillance, mapping and agricultural industries.

Considering the progress around and move towards electric vehicles, it’s unsurprising there is much enthusiasm for this fledgling sector: offering sustainability benefits and significant efficiencies, it is the airborne, more agile counterpart to ground-dwelling cars. But as the technology evolves, and the number of operators increase, so too do the risks. And these risks, of course, must be minimised – starting with regulation.


South Africa was one of the first countries in the world to introduce drone legislation in 2015. Even though the industry is still in the developing stages, the South African Civil Aviation (SACAA) has established a working framework with regards to drone operations and licensing.

In terms of the South African Civil Aviation Regulations, Part 101, drones have been categorised in four sections: commercial, corporate, non-profit and private operations. The type of category that an operator wishes to operate in will determine the level of compliance that is required. Commercial and non-profit operations are more heavily regulated than private operations.  Furthermore, drones are also placed in different classes according to their respective line of sight, energy at impact, height above the surface and maximum takeoff weight.

Another factor affecting drone usage in South Africa is the legislation that dictates where an operator or organisation is allowed to operate. For example, Part 101 of the South African Civil Aviation Regulations states that, unless approved by the SACAA, no drone is allowed to fly near manned aircraft, cannot fly to within ten kilometres or closer to an aerodrome, or fly in controlled airspace, prohibited airspace and restricted airspace, thus making the area of operation for operators limited.

So, a clear, albeit restrictive, framework for use has emerged. But regulations can only go so far; they cannot eliminate risk entirely. So how are the risks surrounding drones being managed?


From loss of signal to loss of battery power, bird strikes and – of course – pilot error, as drone usage proliferates, the industry is building a clear picture of their risk profile. At the same time, the insurance market around drones is developing quickly, with regular dialogue between loss adjusters, brokers and underwriters about the fast-evolving technology and emerging risks.

Loss adjusters have a key role to play in highlighting trends and considerations that are emerging in the claims arena. I expand on these here:

Pilot error is a common cause of incident. This can manifest in a number of ways, including incorrect judgment of distance between UAV and obstacles – for example power lines; selecting the incorrect flight mode for a specific phase of flight; not following the correct procedures in an emergency as stated in the manual; or forgetting to complete pre-flight checks.

Bird strikes are also another common risk. Birds are prone to attack UAVs, causing significant damage, with hawks being a particular issue. Other common causes of claims include loss of signal/connectivity; sudden loss of battery power; pitch/roll instability during landing; hard landings; failed takeoffs; and equipment or component malfunction.

Risk assessment is therefore playing a key role in the development of the industry. This includes knowledge sharing between adjusters and brokers to ensure that all parties fully understand the risks and that policyholders are armed with accurate comparisons of different products. As with any insurance product, competent risk assessment is essential in the calculation of premium.

To achieve a good insurance product for all concerned risk assessments will look at the type of UAV – mature or first generation; loss ratios; jurisdiction – with respect to regulatory oversight and licensing; the drone application; training and oversight of operators; maintenance; and background of the insured.

At the same time, insurers will be considering a range of questions: Who is the operator? What is the UAV type and reliability? Where will operations take place, e.g. in low- or high-risk areas? Why and what impact does this have on risk? And how does it impact risk?

With the industry still in its infancy, many aspects of widespread drone usage remain unknown. Continued dialogue between loss adjusters, brokers and the underwriters involved will be necessary to navigate this new terrain. It is through this constant communication that risk can be effectively mitigated and managed, and premiums contained to an acceptable level for all involved.


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