Hong Kong Economic Times: Low-Altitude Economy | A New Challenge for Insurance: Beyond Weathering Storms, Learning to "Read the Sun's Mood"

Written by: Samuel Lam Hon Yuen

Convener, Drone Take-off Reliability Index (DTORI)

Part-time Lecturer, Hong Kong Baptist University

Just this past Jan 19, a strong G4-class solar storm hit the Earth. For the general public, this might have simply been a spectacular aurora show in the Arctic Circle; but for the "low-altitude economy" industry chain, which is poised for takeoff, it was a heart-stopping stress test.

Within those short 24 hours, GPS positioning errors for low-altitude drones in parts of the world instantly jumped from the daily "centimeter-level" to a dangerous "meter-level." Imagine if a food delivery drone responsible for precision delivery was operating in a busy city center at that time, or an automated inspection drone was flying near high-voltage lines - this ten-meter error could very well be the boundary between safety and an accident.

This event sounded a loud alarm for low-altitude economy practitioners worldwide: In the face of this trillion-dollar "blue ocean" market, have we underestimated the risks coming from outside the atmosphere?

From "Depending on the Weather" to "Reading the Sun's Mood"

For a long time, risk models in the traditional aviation and insurance industries have focused mainly on tropospheric weather - wind speed, rainfall, and thunderstorms. However, with the widespread adoption of the low-altitude economy, the reliance of drones on satellite navigation and radio links has reached unprecedented heights. This means that the factors determining flight safety are no longer just the wind and rain on the ground, but also solar activity 150 million kilometers away.

In current insurance clauses, regarding collisions caused by signal drift due to solar storms - does this count as a technical failure of the operator, or a force majeure natural disaster? If objective data standards are lacking, this will become a "black hole" for claims disputes, thereby hindering the willingness of insurance companies to underwrite policies and slowing down the development pace of the entire industry.

Establishing a "Drone Take-off Reliability Index" is Urgent

To fly far, the low-altitude economy must first build good "digital guardrails." In a recent speech at the Hong Kong Productivity Council (HKPC), the author proposed that the industry urgently needs to establish a brand-new set of standards - such as the "Drone Take-off Reliability Index (DTORI)."

We can no longer rely solely on traditional weather forecasts but must introduce space weather data such as the KP index and ionospheric scintillation. By quantifying these "invisible risks," we can establish a "traffic light" mechanism for low-altitude operations, much like issuing "typhoon signals":

• During periods of quiet solar activity, premiums remain normal;

• When a risk of a G3-level or higher geomagnetic storm is detected, the system automatically triggers an alert, allowing insurance companies to dynamically adjust rates or even activate temporary no-fly protection mechanisms.

This is not just protection for assets, but a responsibility towards public safety.

Hong Kong's Opportunity: A Pioneer in Standard Setting

Hong Kong possesses a high-density urban environment and a mature insurance financial system, making it the best "sandbox" for testing complex low-altitude scenarios. We should not merely be users of technology, but setters of standards.

Through government supervision, combined with the Drone Take-off Reliability Index Committee and the actuarial capabilities of the insurance industry, Hong Kong has the conditions to lead the world in launching the first drone insurance products and risk rating standards that incorporate space weather factors. This will not only escort the local low-altitude economy but can also export this "Hong Kong Standard" to the Greater Bay Area and even the international market in the future.

The solar storm of January 19 has passed, but the next, more intense outbreak could come at any time. On the eve of the low-altitude economy's takeoff, only by respecting risks and building a defense line with data can we fly steadier and further in this vast sky.

#HongKongEconomicTimes #Etnet #LowAltitudeEconomy #DTORI