Abstract
Delivery drones are the new frontier in the logistics area. Worldwide, online retail companies are realising the lucrative nature of utilising drones for delivery purposes. The benefits offered are monumental; however, the unique risks involved cannot be ignored. Amazon is just one of these retail giants recognising the potential delivery drones may offer their clientele. Regulators worldwide need to ensure that adequate regulations are in place to ensure the safe and effective use of these systems. From an insurance perspective, insurers need to be privy to the unique risks delivery drones pose to provide the delivery companies with adequate insurance coverage. Therefore, insurance policies need to be well-drafted and suitable for this innovation in logistics. Regulators and insurers will need to come together to harmonise the future of delivery drones.
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Notes
- 1.
Vincent and Gartenberg (2019).
- 2.
Vincent and Gartenberg (2019).
- 3.
Burda (2021).
- 4.
Insurers use drones to assess the state of impact after natural disasters in areas where access is difficult to acquire as well as in the assessment of damages and risks.
- 5.
Hodgkinson and Johnston (2018), p. 111.
- 6.
Vincent and Gartenberg (2019).
- 7.
Vincent and Gartenberg (2019).
- 8.
Wing is already undertaking this in countries such as Australia and Finland. See https://wing.com.
- 9.
Keane and Carr (2013), pp. 559–561—showing how the early predecessor to the modem drone was the military aerial torpedo, designed in 1916.
- 10.
Hodgkinson and Johnston (2018), p. 1.
- 11.
North (2015), p. 334.
- 12.
Burzichelli (2016), p. 165.
- 13.
Burzichelli (2016), p. 164.
- 14.
Hodgkinson and Johnston (2018), p. 112.
- 15.
Hodgkinson and Johnston (2018), p. 11.
- 16.
Marsh (2015), pp. 1–5.
- 17.
Huneberg (2017), p. 596.
- 18.
Hodgkinson and Johnston (2018), p. 113.
- 19.
Hodgkinson and Johnston (2018), p. 113.
- 20.
Hodgkinson and Johnston (2018), p. 113.
- 21.
Kennedys (2017), p. 3.
- 22.
Such as the new regulations in South Africa contained in Part 101 of the South African Civil Aviation Authority (CAA).
- 23.
See Amazon Prime Air website. https://www.amazon.com/Amazon-Prime-Air/b?ie=UTF8&node=8037720011.
- 24.
Burzichelli (2016), p. 166.
- 25.
- 26.
Burzichelli (2016), p. 166.
- 27.
Hodgkinson and Johnston (2018), p. 128.
- 28.
Burzichelli (2016).
- 29.
Burzichelli (2016).
- 30.
- 31.
See Amazon Prime Air website. https://www.amazon.com/Amazon-Prime-Air/b?ie=UTF8&node=8037720011.
- 32.
This gives Amazon the ability to carry property on small drones ‘beyond the visual line of sight’ of the operator. Palmer (2020).
- 33.
See Amazon Prime Air website. https://www.amazon.com/Amazon-Prime-Air/b?ie=UTF8&node=8037720011.
- 34.
Miller (2020), pp. 140–141.
- 35.
In 2018, drones brought Gatwick Airport to a standstill.
- 36.
Mathews (2015), p. 586.
- 37.
Barrett (2016).
- 38.
Mathews (2015), p. 594.
- 39.
Fox (2017), pp. 687–700.
- 40.
- 41.
Huneberg (2017), p. 597.
- 42.
Huneberg (2017), p. 597. In Leading Prospects Trading 38 (Pty Ltd) v Centrique Insurance Company and Tromp GPPHC 8 April 2015 (case 302 unreported), the pilot flew below 500 feet in a manoeuvre that did not form part of landing or take-off and crashed into power lines. As it is a well-known fact that power lines are below 500 feet above ground, the only logical conclusion that could be made was that the pilot was at fault.
- 43.
Hodgkinson and Johnston (2018), p. 34.
- 44.
Allianz Global Corporate (2016), pp. 3–7.
- 45.
Allianz Global Corporate (2016), pp. 4–9.
- 46.
This happens when in the radio frequency spectrum, a disturbance is generated by an external source that affects an electrical circuit by electromagnetic induction, electrostatic coupling or conduction.
- 47.
This is evident from the current insurance offerings provided by big and small insurers.
- 48.
Thompson (2021). On this mobile app, pilots (commercial and recreational operators) can purchase liability insurance on demand. The cost of cover is ‘exposure-based’ which is assessed according to the risk of each flight considering real-time data and algorithms to assess the specific risk involved.
- 49.
On this risk, it will be important to consider whether the drone uses any technology for recognising air traffic which will then force certain actions to avoid collisions.
- 50.
This will also require proper identification of the receiver and authentication.
- 51.
Thompson (2019–2020), pp. 8–9.
- 52.
This will be further elaborated on in Sect. 6 below.
- 53.
Mathews (2015), p. 580. Just recently, India has utilised drones to deliver COVID-19 vaccinations to people in rural areas.
- 54.
- 55.
- 56.
- 57.
Business Tech (2019) where in South Africa, Old Mutual iWyze have applied for CAA approval to be allowed to use drones for car crash investigations and crop loss assessments.
- 58.
Miller (2020), p. 140.
- 59.
South African Civil Aviation Authority Media Statement (2014).
- 60.
South African Civil Aviation Authority Media Statement (2014).
- 61.
Part 101 (Remotely Piloted Aircraft Systems) of the Regulations to the Civil Aviation Act 13 of 2009.
- 62.
Part 1.01.1 of the Regulations to the Civil Aviation Act 13 of 2009. The term ‘toy aircraft’ is defined as a product designed or intended for use in play by children. The term ‘model aircraft’ means a non-human carrying aircraft capable of sustained flight in the atmosphere and used exclusively for air display, recreational use, sports or competitions.
- 63.
SA-CATS 101 of the Regulations to the Civil Aviation Act 13 of 2009 provides for various classifications of drones according to their size and speeds.
- 64.
Part 101.01.1(2).
- 65.
Part 101.01.2.
- 66.
Commercial operations include—commercial, corporate and non-profit operations, which are all essentially operations that will carry some form of commercial outcome, interest or gain.
- 67.
Part 101.01.5 states that: ‘No RPA shall be sold within the Republic unless the seller has, by way of a packaging label, or in the case of the resale thereof, by way of written notification, notified the buyer of the requirements as prescribed in Document SA-CATS 101’.
- 68.
See the definition of ‘private operation’ in Part 1.01.1 of the Regulations to the Civil Aviation Act 13 of 2009.
- 69.
Part 101.01.7 of the SA-CATS 101.
- 70.
While it may seem fair that there are less administrative requirements on private use operators, it cannot be ignored that these individuals may pose a higher risk than a commercial operator who has undertaken the required formal training.
- 71.
Part 101.02.4.
- 72.
Part 101.02.4(5).
- 73.
Part 101.03.2.
- 74.
Part 101.03.6.
- 75.
Part 101.03.7.
- 76.
Part 101 Subpart 4 and 5.
- 77.
Part 101.04.12.
- 78.
Part 101.05.10(3).
- 79.
Part 101.05.17.
- 80.
Part 101.05.20. However, if there is a danger of a head on collision, each aircraft must alter its course to the right.
- 81.
Part 101.05.13.
- 82.
Part 101.05.15.
- 83.
Part 101.05.14.
- 84.
Part 101.05.13–15.
- 85.
Drones, unlike manned aircraft, do not require an airport, runway or any formal record of a flight itinerary or path.
- 86.
- 87.
Caboz (2020).
- 88.
Caboz (2020).
- 89.
Caboz (2020).
- 90.
Reinecke et al. (2013), p. 82. Ackerman v Loubser 1918 OPD 31 34.
- 91.
Reinecke et al. (2013), p. 86. Lake v Reinsurance Corporation Ltd 1967 (3) SA 124 (W) 127–128.
- 92.
Reinecke et al. (2013), pp. 89–90. Prudential Insurance Co v Inland Revenue Commissioners [1904] 2 KB 258662.
- 93.
- 94.
Reinecke et al. (2013), p. 540.
- 95.
Marsh (2015), pp. 8–11.
- 96.
All of these require third-party liability insurance under the regulations.
- 97.
See the current Civil Aviation Act 13 of 2009. This statute was preceded by the Aviation Act 74 of 1962. Other aviation legislation includes the Air Services Licensing Act 115 of 1990, the Air Traffic and Navigation Services Company Act 45 of 1993, the South African Civil Aviation Authority Levies Act 41 of 1998 and the South African Maritime and Aeronautical Search and Rescue Act 44 of 2002.
- 98.
18 of 2017.
- 99.
See Schedule 2 of the Insurance Act 18 of 2017.
- 100.
Class 6 of Schedule 2 of the Insurance Act 18 of 2017.
- 101.
The Insurance Act 18 of 2017 defines personal lines insurance as ‘non-life insurance business where the policyholder is a natural person, acting otherwise than solely for the purposes of the person’s own business’. Commercial lines business is defined as ‘non-life insurance business other than in respect of personal lines’. Yiannakis (2019), pp. 19–20.
- 102.
Reinecke et al. (2013), p. 538.
- 103.
Padayachee (2021), p. 13.
- 104.
Reinecke et al. (2013), p. 539. Boshoff v South British Insurance Co Ltd 1951 (3) SA 481 (T).
- 105.
Reinecke et al. (2013), p. 538. Cape Town Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA 311 (C).
- 106.
Jacobs (2011), p. 464.
- 107.
Millard (2013), p. 45. Watson NO v Shaw NO 2008 (1) SA 350 (C).
- 108.
18 of 2017. It details the classes and sub-classes of insurance business for non-life insurance.
- 109.
Table 2 of Schedule 2 of the Insurance Act 18 of 2017. Yiannakis (2019), pp. 19–20.
- 110.
Table 2 of Schedule 2 of the Insurance Act 18 of 2017.
- 111.
Reinecke et al. (2013), p. 10.
- 112.
Reinecke et al. (2013), p. 540.
- 113.
Part 101.04.12 of the Regulations to the Civil Aviation Act 13 of 2009.
- 114.
Either while in flight or on the ground.
- 115.
Such as improved camera systems, gimbals or sensors.
- 116.
Such as third-party liability cover for damage to other people’s body or property. Yiannakis (2019), pp. 20–21.
- 117.
Owners of cheaper drones might not be worried about the risk of theft or loss.
- 118.
The risks associated with commercial flights in populated areas are much higher than a private operator flying in an open field for recreational purposes.
- 119.
Commercial or private use.
- 120.
The more often the drone is flown might weigh upon the insured and their desired cover limit. For example, an operator that plans to fly their drone daily carries more risk than one who will only fly their drone a few times a year.
- 121.
Drones that can go further (flying many kilometres outside line of sight) will be susceptible to more risk than a drone that can only operate 50 metres away from the pilot. Yiannakis (2019), p. 21.
- 122.
An example is Hollard’s current offerings for ‘Specialist Sector Insurance’.
- 123.
Yiannakis (2019), p. 21. An example is Hollard’s Specialist Sector Insurance available at https://www.hollard.co.za/business-insurance/specialist-sector-insurance/drone. This is an example of how insurers are relying on the drone regulations to provide adequate cover to operators considering the risks posed by such operators.
- 124.
Flock offers drone insurance in Europe at monthly and annual subscriptions as well as usage-based offerings (pay-as-you-use). The monthly and annual subscriptions provide worldwide cover for unlimited flights and policies are priced according to the safety and size of the operations being undertaken. In July 2019, Flock also introduced a product called ‘Enterprise’ which is set to provide scalable exposure-based insurance for connected drone fleets.
- 125.
The Air Navigation Amendment Order 2018 No. 623.
- 126.
United Kingdom Civil Aviation Authority ‘An introduction into unmanned aircraft systems’ (2022).
- 127.
Civil Aviation Authority ‘CAP 1421 - Annual Report & Accounts 2015/16’ 11.
- 128.
Haylen (2019), p. 10. They are also to receive new powers, including to land, inspect and seize drones, under the Traffic Management and Unmanned Aircraft Bill. Drone pilots could face on the spot fines of up to £1000 for offences such as not having or displaying a flyer ID, not being able to provide proof of permissions and exemptions and, of course, for flying dangerously and/or in restricted locations.
- 129.
Haylen (2019), p. 10.
- 130.
1982.
- 131.
2016 (SI 2016/765).
- 132.
No. 261.
- 133.
The amendment came into force on 13 March 2019. This most recently amended order details new specific regulations that come into force on 30 July 2019 and 30 November 2019, respectively.
- 134.
One can refer to the UK Consolidation Regulation 2019/947. Refer further to CAP1789A.
- 135.
The new rules remove the requirements of PfCO (Permission for Commercial Operations).
- 136.
There is a £9 fee for this, and one must be 18 or over to register for an operator ID. Drone owners in the UK will need two IDs before flying outdoors, the Flyer ID and an Operator ID. The person or organisation that is responsible for a drone or model aircraft that requires an operator ID must register to get an operator ID. The flyer ID is for the person flying the drone. The operator and flyer need not be the same person. The operator ID is valid for 12 months, but flyer ID lasts for five years. The two exceptions are for toy drones that weigh under 250 g and do not have a camera and need neither ID; and drones that weigh below 250 g and have a camera which only need an operator ID.
- 137.
Anyone under the age of 13 is still required to get a Flyer ID but must have someone over 18 with them to take the test.
- 138.
It is worth noting that the Delegated Regulation lays down the requirements for the design and manufacture of UAS and rules on making UAS intended for the use under the open category, including additional components. The regulation also sets out requirements for importers and distributors.
- 139.
Brown (2020).
- 140.
The UK regulations relating to the Certified Category are still being developed and are not yet published. Until unique UAS regulations are available, the principles set out in the relevant manned aviation regulations for airworthiness, operations and licensing will be used as the basis for regulating the Certified Category. From 1 January 2023 all new drones will be required to meet a set of product standards and will be classified from C0 to C4. These classes will be based on the weight and capability of the drone and will determine how and where you can fly.
- 141.
Restricted airspace means that one cannot fly in these areas unless one has permission from the relevant authority. These areas include around airports, critical infrastructure and military installations.
- 142.
See EU legislation and the UK law. Section 3 of European Union Withdrawal Act 2018.
- 143.
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.
- 144.
Article 7 Regulation (EC) 785/2004.
- 145.
Article 2 Regulation (EC) 785/2004. Take note that the word ‘model’ has been interpreted by the aviation authorities to mean ‘for sport or recreational use only’. Therefore, any drone that is being used for commercial purposes needs to comply where ‘commercial’ has been defined as ‘an operation for remuneration and/or hire’.
- 146.
See Air Navigation (Amendment) Order 2021 section 7.
- 147.
Burda (2021).
- 148.
Hodgkinson and Johnston (2018), p. 114.
- 149.
Burda (2021).
- 150.
Lawrenson and De Oliveira (2018).
- 151.
Lawrenson and De Oliveira (2018).
- 152.
Kennedys (2017), pp. 12–14.
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Appendices
Legislation
-
Air Navigation (Amendment) Order 2021.
-
Air Navigation Amendment Order 2018 No. 623.
-
Civil Aviation Act 13 of 2009.
-
Civil Aviation Authority CAP 1421 - Annual Report & Accounts 2015/16.
-
EU Regulation 2019/437.
-
Insurance Act 18 of 2017.
-
Part 101 of the Civil Aviation Authority Regulations.
-
Regulation (EC) No 785/2004 of the European Parliament and of the Council of 21 April 2004.
-
UK Consolidation Regulation 2019/947.
Case Law
-
Ackerman v Loubser 1918 OPD 31 34.
-
Boshoff v South British Insurance Co Ltd 1951 (3) SA 481 (T).
-
Cape Town Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA 311 (C).
-
Lake v Reinsurance Corporation Ltd 1967 (3) SA 124 (W).
-
Leading Prospects Trading 38 (Pty Ltd) v Centrique Insurance Company and Tromp GPPHC 8 April 2015.
-
Prudential Insurance Co v Inland Revenue Commissioners [1904] 2 KB 258.
-
Watson NO v Shaw NO 2008 (1) SA 350 (C).
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Huneberg, S. (2023). Drones: The New Delivery Men? A South African and UK Perspective. In: Noussia, K., Channon, M. (eds) The Regulation of Automated and Autonomous Transport. Springer, Cham. https://doi.org/10.1007/978-3-031-32356-0_2
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