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Posted: November 23, 2007
Nanotechnology - what are the risks from an insurer's point of view?
(Nanowerk News) Lloyd's, the world's leading insurance market providing specialist insurance services to businesses, carries an article on its website trying to explore what nanotechnology mean for the insurance industry:
At best, insurers may have new products to insure made with safer materials that lead to lower insurance losses. At worst, nanotechnology could lead to unexpected life, health and workers compensation and physical damage and pollution losses.
The Lloyd's Emerging Risks team is launching a report in December looking at nanotechnology and alongside the report the Lighthill Risk Network is holding a conference where leading scientists and legal experts will share their knowledge. The conference, entitled ‘Risks and Opportunities of Nanotechnology’, will take place on Monday 10 December in the Old Library at Lloyd’s.
Trevor Maynard, Manager of Emerging Risks at Lloyd’s, says: “Nanotechnology presents the insurance industry with both an emerging market and an emerging risk. The Lloyd’s report and the Lighthill Risk Network conference will provide underwriters with an ideal opportunity to increase their knowledge of nanotechnologies. We hope underwriters, involved in product liability and in assessing risk and capital requirements relating to latent claims, will attend.”
The word 'nano' itself refers to the length scale that is one thousand times smaller than the micro scale, the scale traditionally associated with the electronics industry. Viruses and DNA are examples of natural objects on the nano scale.
Manipulating matter atom by atom and creating features on the atomic or 'nano' scale is now a proven technology and current and potential areas of application range from manufacturing and environmental management to cosmetics and defence.
Nanotechnology is a growing business and between US$30 billion to US$200 billion worth of products contained nanotechnology in 2005. One estimate suggests that 15% of global manufactured goods will contain nanotechnology by 2014 which could lead to a large pool of products from which latent claims could arise.
The UK Council for Science has highlighted there is not sufficient research into nanotechnologies and while some research has started there are still significant gaps in knowledge. Some nano-particles have been shown to be harmful to life and removing nano-particles from the environment may present a problem due to their small size.
Questions have also been raised on whether nano-particles can cause chronic health affects similar to asbestosis? The short answer is that we simply do not know. Initial investigations show that some nano-particles are acutely toxic when compared to larger particles composed of the same material.
Regulation specifically for nanotechnology is still under development with stakeholders in nanotechnology having opinions ranging from ‘nano-specific regulation is not needed’ to those who believe that there is a ‘regulatory void that could harm both health and the economic stability.’
An important step was undertaken recently when the Organisation for Economic Co-operation and Development (OECD) released a Nano Risk Framework to evaluate and address the potential risks. Ultimately, ensuring that the diverse applications of nanotechnology have a regulatory framework is the challenge facing governments and industry and insurers will need to pay close attention to this process.
Nanotechnologies could also bring direct benefits with new materials that are stronger and more adaptive, for example:
Cars could be made to absorb more of the impact during a crash
Building materials could be made stronger and more flexible to resist damage from earthquakes, fire, flood and corrosion
Environmental cleanup operations could be made easier and cheaper with the use of specialised nano-particles
Medicine could also be transformed by nanotechnology allowing cheaper and more sensitive diagnostic tools for diseases giving insurance professionals better statistics to determine pricing
A significant amount is now being invested each year to develop products like these. The Lloyd’s market has always been a leader in the development of insurance for new technologies, and so nanotechnology is an emerging area to watch carefully.
If you are interested in attending the Lighthill Risk Network event or receiving a copy of the Emerging Risks report, please contact Natalie Compton, Customer Systems and Relationship Manager at [email protected], or David Baxter, Lead Researcher, Emerging Risks at [email protected]