Costs of ‘law of unintended consequences’ would be borne by the insurance market

Lockton’s Asia head of multinational clients Peter Jackson says that it is important that insurers stay abreast of the use of nanotechnology by their clients, particularly as the long-term implications are not well understood.

“It may be a case of the law of unintended consequences, the costs of which would be borne by the insurance market,” he argues.

“It also has potential implications for brokers. Market submissions may need to include how their clients are using nanotechnology if carriers start to perceive a long-term risk.

“What is required is an industry debate similar to the discussion around cyber security and the role of insurance.”

Key to this is identifying which types of products and industries using nanotechnology present the highest exposures, and at what point on each product’s lifecycle that risk is its highest. One of the main concerns is that the properties of matter and materials change significantly when you make them so small: something that was opaque can become transparent and something that was stable can become unstable.

Insurers and scientist agree that when nanoparticles are bound together that the risk is lower than when they are airborne. Based on this, the chemical industry presents the highest level of risk from an insurance perspective, followed by the cosmetics and personal care industries. On the other end of the scale, the automotive and electronic industries present much fewer exposures.

Exposure potential

A position paper produced last year by the CRO Forum Emerging Risks Initiative states that the low exposure potential arising from carbon nanotubes used in memory chips in the IT industry contrasts with the medium exposure potential of carbon nanotubes used for therapeutics within the pharmaceutical industry.

Swiss Re was one of nine (re)insurers that contributed to the CRO paper, which concluded that a comprehensive review of the material life-cycle is key to coping successfully with the risks associated with nanotechnologies. Swiss Re senior risk engineer Roland Friedli says that nanotechnology is a technology that has the potential to change the insurance landscape in the coming years.

“Any new product needs insurance if it is to become commercially viable, which is why insurers have a responsibility to keep pace with emerging developments like nanotechnology,” Friedli says.

A mini revolution

Many scientists are anticipating that a revolution will be brought about by nanotechnology. Predictions range from the ability to reproduce things like diamonds and foods, to curing cancer, creating foldable TV screens, and the world being run by self-replicating nanorobots.

Already nanotechnology is a significant contributor to many everyday products including sunscreen and cosmetics, self-cleaning glass, crinkle-resistant clothing, antimicrobial bandages, tennis rackets and golf balls. The most widely applied used of nanotechnology, however, has been in the oil and chemical industries and the electronic industry.

The International Nanotechnology Exhibition & Conference held in Tokyo in January featured seminars on nanotechnology for printable electronics, regenerative medicine, and ultra-light and strong non-woven fabrics.

The Nano Today Conference that was run in Singapore in December 2013 examined such topics as the synthesis of nanocrystals, nanosystems for biological and medical applications, and the use of nanomaterials in energy creation and catalytic applications.

What all this rapid progress means is that in some instances the pace of growth has outpaced that of regulation. There are calls for insurers to work with government and private business to fund the creation of ISO nanotechnology standards.

So whether it’s using nanotechnology to create flexible mobile phones, or to develop improved medicines and diagnostics, insurers’ understanding of the risk is key to industry development.