Hong Kong pushes insurers to back low-altitude economy

Operators of small unmanned aircraft must carry third-party liability cover of $1.3m to $2.6m.

Hong Kong’s insurance regulator said it is working with insurers to support the development of the city’s low-altitude economy, as the wider use of unmanned aircraft creates new risk management and insurance needs.

The Insurance Authority (HKIA) said on 13 February it has been helping the industry identify opportunities to provide insurance cover for businesses, institutions and the public involved in low-altitude activities, with the aim of supporting a safe and stable operating environment.

Under current regulations, operators of small unmanned aircraft are required to hold third-party liability insurance covering bodily injury or death.

The minimum sum assured ranges from $1.3m (HK$10m) to $2.6m (HK$20m), depending on the aircraft’s weight and operational risk level.

The HKIA said more than 13 insurers currently offer such products in the market.

The regulator is also encouraging insurers to raise safety awareness amongst unmanned aircraft users and operators through product design and service improvements.

This includes the use of risk assessments and differentiated underwriting, such as evaluating whether operations involve higher-risk activities like flying beyond visual line of sight or in densely populated areas.

Premiums may also reflect factors such as the operator’s training, maintenance records and flight data management.

The HKIA said these practices are intended to strengthen risk management standards and support the sustainable growth of the low-altitude economy.

It is also urging insurers to make use of data from the government’s Low-Altitude Economy Regulatory Sandbox and the enhanced Regulatory Sandbox X.

The data allows insurers to analyse unmanned aircraft operations under different scenarios, helping improve pricing accuracy, underwriting and product competitiveness.

A task force set up by the Hong Kong Federation of Insurers is using the sandbox data to study issues such as underwriting challenges in complex operating environments, claims handling after incidents and cross-border risks linked to operations beyond Hong Kong.

The HKIA said risks are expected to become more complex as the low-altitude economy expands into areas such as larger unmanned aircraft, drone-based logistics, emergency services, medical deliveries and, in the longer term, manned low-altitude transport.

It added that insurers can play a bigger role through product innovation, cross-border cooperation and talent development to support the sector’s long-term growth.

($1.00 = HK$7.82)