Drone technology and automation are accelerating shifts in aviation insurance, creating both challenges and opportunities for MGAs, program administrators, and specialty brokers. While pilot shortages remain in the headlines, they are “ultimately cyclical and manageable,” said William Tabbert (pictured above), co-head of Starfish Specialty Insurance Services. Drones, by contrast, are forcing structural change across aviation insurance programs.
“The longer trend is going to be… the continued emergence of the drones, UAV sector,” Tabbert said. He cited agriculture as a breakout market for drone insurance. “We know of about three or so different insurers that are all of a sudden trying to attract… agricultural drones.”
Tabbert believes this growth will outpace the current US pilot shortage – estimated at 8,000 and rising. But the shortage, he said, won’t destabilize the sector. “It’s going to be a supply and demand [issue], as always.”
Despite investor interest, last-mile drone delivery in urban areas remains years away. “That’s a ways off,” Tabbert said. “It always ends up being the last mile that’s the challenge… getting it to the consumer within the mile of distribution.” Regulatory friction, privacy concerns, and public hesitation remain barriers – even as drone platforms improve.
Charles Koehler (pictured right), also co-head at Starfish, said drones and advanced air mobility (AAM) systems will soon dominate aviation insurance strategies. “They’re definitely going to be the biggest impact on not only our lives, but in the insurance world,” he said.
That impact goes beyond logistics. “Underwriters are going to have to dig into the weeds… and understand not only the technology, but how to manage that technology,” Koehler said. He pointed to emerging cyber exposures, liability gaps, and airspace governance as critical friction points for drone insurance in 2025 and beyond.
While full aircraft electrification is still in the distance, automation is already transforming insurance operations. Tabbert noted that black-box telemetry in drones and turbine engines now enables forensic loss analysis. “Any loss, you can forensically see exactly [what happened] with so many different parameters,” he said.
That has opened the door for usage-based insurance and app-enabled aviation coverage models. But Tabbert warned of pitfalls: “You risk insuring your phone as opposed to your unit,” he said, highlighting coverage gaps in app-only offerings.
Older aircraft pose a different risk. “They won’t have that kind of information available,” Tabbert said. “A small damage to that engine… could end up being a very, very large cost.”
Koehler noted a deeper change in underwriting workflows. “Underwriters, who are used to putting pilots with airplanes… now… have to go back to the manufacturers,” he said. Risk assessment now includes software integrity, calibration routines, and system fail-safes - particularly for electric aircraft. “What happens when something fails? That liability is going to switch… and with that comes [the question], where does the fault lie?”
Capacity limitations continue to challenge aviation MGAs and insurers. Koehler said that capacity pullbacks began five years ago when carriers and reinsurers cut limit authority. “It left some holes in some higher-level capacities and availability,” he said.
Adding to that stress is the impact of social inflation in the US legal environment. “Insurers are getting very, very reluctant… so capacity has been reduced,” Koehler said. “We’re finding that out with Lloyd’s right now.”
Program administrators serving global aviation clients must navigate an increasingly complex landscape of geopolitical and regulatory risk. Tabbert said Starfish often partners with reinsurers because of its specialization and global network. “You have to have specialists… and you have to have relationships,” he said, especially as global broker networks consolidate.
He emphasized the role of ICAO protocols – aviation safety standards adopted by nearly 200 countries - as foundational for international risk management. “Our policy has worldwide territory,” Tabbert said. “We’re not concerned if there is a loss pretty much anywhere on the globe.”
Koehler added that staying ahead of cross-border regulatory shifts is now essential. “There are subscriptions… you get notifications when something changes,” he said. “You have to have that technical knowledge… not just [for] the operation of the aircraft, but rules and regulations.”
