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The Unmanned Air Taxi Phenomenon – An Aircraft Insurance Perspective

A lot of companies are investing and developing unmanned aircraft for use as people carrying Air-Taxis. From an outsider’s perspective the aircraft appear to be large scale drone technology. While I am not an expert on these technologies, it is easy to deduce that the reliability of drone electric motors and the stability that has been programmed into these drones is being translated into aircraft for carrying people.

Just like drones, the unmanned air taxi prototypes out there appear to have independent motors attached to each propeller. With the use of abundant computer power the motors are controlled to guide the vehicle and to keep it flying should one of the motors fail.

I suspect they are unmanned because the savings in weight and costs have determined this is the most efficient way to deliver passengers to their destination.

From an insurance perspective the concept appears to be a very safe solution to low speed, low altitude travel. Here are the challenges I see from a risk perspective:

  1. Computer navigation malfunctions resulting in collisions with objects or other flying aircraft.
  2. Power failure resulting in too many motors going offline.
  3. Battery fire hazards from either improper design or crash.

For the first 2 unlikely scenarios, ballistic parachutes would seem to be the obvious solution as they are currently available and have successfully saved many lives. However, ballistic parachutes have minimum altitude requirements that must be met. Currently ballistic aircraft parachutes need a minimum altitude of 400′.

Based on the mission of short hops in an urban environment, a significant amount of time will be spent at less than 400 feet. If engineers can devise a ballistic parachute that can work in zero-zero conditions, such as military ejection seats, then it is hard to imagine an accident that would result in serious injuries or fatalities.

Battery fire hazards appear to have been addressed both in airliners and electric cars thus far, I suspect this safety margins will be paralleled in the unmanned air taxis.

From an aircraft insurance perspective there are 2 main risks of concern, Hull & Liability:

HULL

Damage to the aircraft itself. Relative to current pressurized jet aircraft it appears these vehicles would be much lower in value. For one, they don’t have pressure hulls, and the electric motors operate independently so one could assume in small accidents not all powerplants will be damaged. Therefore Hull coverage should not be an expensive component of the insurance coverage.

LIABILITY

Property Damage or Bodily Injury. In current manned aircraft accidents, most of the damages and injuries occur to the people inside the aircraft. While there are plenty of examples of persons or property damaged outside the aircraft the majority of accidents only affect the people inside.

Unfortunately the majority of piston-driven aircraft in the United States are under-insured as the limit readily available and often offered for liability coverage equals $100,000 per passenger. With average aviation wrongful death settlements in the United States hovering around $6,000,000 per person, these limits are woefully inadequate. Therefore any publicly available unmanned air taxi solution has to offer at least $10,000,000 per 2-person craft to properly address the potential liability.

There are 2 reasons piston aircraft have this limitation:

  1. Piston engine technology is unreliable relative to a turbine driven motor like a jet or turbo-prop.
  2. Pilots in light aircraft are often not professional pilots, meaning they spend less time training and less time practicing their craft relative to professional pilots.

Since electric motor technology appears to be more predictable and reliable than piston engines, and because the individual reliability of each motor is less relevant in vehicles with multi-engine and independent systems – point 1 appears to be less relevant.

Since pilots have been eliminated from the equation, but we don’t have mass use of unmanned vehicles in urban environments – this is the million dollar question.

Therefore the industry must deliver a navigation and control system that can deal with the following real world variables:

  • people
  • animals
  • unmarked obstacles
  • manned and unmanned aerial vehicles

If this system is delivered and matches the safety margins of major US airlines then this will make the system easily insurable and likely to have a profound effect on civilization.