By: Luke Jones, Published on February 14, 2017 07:21 PM, Last Update on February 14, 2017 02:24 PM
Personal and commercial drone insurance will become a major market this year as production and sales of drones continues to grow rapidly. Gartner, an information and technology research company, says the global market for personal and commercial drones will reach US$6 billion in 2017.
This prediction represents a 34% year-on-year increase, and is the start of a trend Gartner says will continue in coming years. Indeed, the company says the market will have increased to more than US$11.2 billion by 2020.
With the market set to grow substantially, there will be opportunities for insurance companies. The commercial drone market will see an influx of companies embrace the technology in the coming years. Many of these organizations will seek insurance coverage for their drones and liability for potential damage.
Through its forecasts, Gartner predicts there will be a drone production increase of 39% this year as almost three million will be made. In a press release, the company says drones have continued to be popular despite confusion over how these vehicles will be regulated for both commercial and personal use.
Despite predicted growth across the industry, Gartner says the personal and commercial drone submarkets are different.
Personal drones will continue their consistent growth as more affordable models flood the market. Many drones are extensions of smartphone devices, an appealing prospect for consumers as they can be used for selfies and entertainment. Consumer-oriented drones have limitations that differentiate them from commercial models.
For example, they can typically fly no more than 5,000 metres and last only around an hour. Flight height is restricted to 500 metres and they weigh less than commercial models. Personal drones are typically defined at a cost of under US$5,000.
The commercial drone market is smaller, but companies have higher margins due to the greater cost of the models. Countries are finalizing regulations on commercial drone use, which should see a growth in the number of organizations adopting them, says Garnets. These drones can carry loads, have longer flight times, higher height ceilings, flight controllers, mapping, and can fly longer distances.
“The commercial and personal drone markets are increasingly overlapping, as lower-priced personal devices are being used for commercial ventures,” said Gerald Van Hoy, senior research analyst at Gartner, in the release. “Personal drone vendors are now aggressively trying to position themselves in the commercial market. Recent technological advances blur the lines, allowing personal drones to be used in many special-purpose applications such as surveillance, 3D mapping and modelling.”
While the nascent delivery drone market has garnered attention, Gartner believes the market is several years away from substantial growth.
“Delivery drones will be mired in logistical issues like the time needed to return a drone to its origin point after delivery, and will amount to less than 1 per cent of the commercial market by 2020,” Van Hoy said. “We expect that delivery drones will begin finding a niche in business-to-business applications first, particularly for internal services within one company where logistics will not be such a big factor.”