Nanotechnology has often been touted as a new and potentially revolutionary way to improve nearly every aspect of modern life, but has also faced doubt from skeptics who have raised concerns about the downside to incorporating such innovative technology in everyday life. Possible dangers include the unintended consequences of the accumulation of nanoparticles in the human body or the environment. In response, risk management and insurance companies have begun to develop measures to address these concerns, from evaluating and underwriting nanorisks to taking risk management ideas to the nanotechnology community. One company, Zurich, has developed a web-based software product which looks at nanoparticle characteristics to assist nanotechnology users determine potential hazard levels. Another company, Lexington Insurance, has created a integrated coverage insurance policy specifically for nano clients, especially those who may need special assistance in gauging the level of risk management in the field.
For anyone interested, I am presenting my recently approved Virginia CLE presentation "Insurance, Nanotechnology, and Risk" in mid-September to a national intellectual property law firm based here in D.C. The presentation covers issues related to the alleged environmental, health, and safety (EHS) risks accompanying certain nanoscale materials from the perspective of both the insured and insurer. Particular emphasis is placed on (i) insurer approaches to EHS risk and uncertainty, (ii) the first commercial insurance exclusion for nanotechnology in the US, (iii) industry reaction to certain recent adverse EHS studies concerning carbon nanotubes, and (iv) three initial steps nano-related businesses should consider when dealing with these issues. The PowerPoint was originally presented at the Nanotechnology Health and Safety Forum in Seattle in June 2009, and the National Nanotechnology Initiative also asked for it to be presented at the opening plenary for its October 2009 workshop on "Nanomaterials and the Environment & Instrumentation." I anticipate additional presentations of the CLE in D.C. and Virginia over the upcoming months. Please let me know if you have any interest in attending one of the future sessions and I will try to hook you up for some free CLE credit.
For anyone who might be interested, I will be speaking on nano-related insurance issues at the opening plenary of the National Nanotechnology Initiative's upcoming Oct. 6 -7 conference and workshop on Nanomaterials and the Environment & Instrumentation. The draft agenda for the conference can be found here, and the plenary is also supposed to be broadcast on the web. I will post the information for the simulcast as we get closer to the conference date. Cost, location, and registration info. is here.
Zurich North America recently published the June 2009 edition of its Industry Insight online magazine which focuses exclusively on nanotechnology issues. The magazine contains four informative articles which are well worth reading:
- "At the leading edge: Zurich's thought leadership on nanotechnology;"
- "No small thing: The enormous potential of nano;"
- "The kings of small things: The regulatory environment for nanotechnology development;" and
- "Large risks from small things? Myth and reality of nano-risks."
Our readers may be particularly interested in the "leading edge" article in which Zurich describes its nanotechnology emerging risk activities dating back to 2006. The article discusses Zurich's involvement in ANSI's TAG to ISO/TC 229 Nanotechnologies standards and nomenclature group; its ongoing efforts to make sure its voice is heard in the ongoing regulatory debate surrounding certain nanoscale materials; and the formation of a new Zurich Nanotechnology Exposure Protocol™ (ZNEP™).
As Zurich explains, its new ZNEP™ is a risk assessment protocol designed to understand potential nano-related insurance risks:
"By working closely with corporate customers, collecting data on the specific nano-particles they were using, learning about the specific applications where they're employed, and then combining this information, Zurich could form a global overview of nanotechnology and its various facets of risk. Such an activity would not only be a very good way to protect is business, but it could form a basis for providing risk management advice to its customers going forward."
Zurich is working with Seattle-based Intertox to implement its ZNEP™, which it also hopes will dramatically shorten the lag time between discovery of new nanotechnology-based inventions and their insurability. Readers may also recall that Zurich's Director of Emerging Issues recently spoke on insurance issues at the very well-attended Nanotechnology Health and Safety Forum in Seattle, Washington.
Chubb Insurance is hosting a one-day nanotechnology insurance conference on October 13, 2009 in North Branch, New Jersey:
"Nanotechnology: What is the Best Safety and Risk Management Approach?"
From the conference website:
"This conference brings together prominent nanotechnology speakers who will review nanotechnology background, health and safety, and potential insurance and liability issues. Current risk assessment and 'best practice' controls will be shared, helping attendees better recognize and manage potential nanotechnology risks. A nanotechnology toolkit will be provided to help attendees stay abreast of critical developments in this dynamic field."
Speakers include: Charles Geraci (NIOSH), Charles Kingdollar (General Reinsurance Corp.); John Monica (Porter Wright); Susan Berry (DRS Technologies); Ganesh Skandan (NEI Corp.); William Barr (Chubb); Erik Olsen (Chubb); and Louise Vallee (Chubb).
More from the conference website:
Emerging risks require new risk management practices. Nanotechnology applications have outpaced safety and health research. The big challenge is trying to figure out a risk management roadmap when there is a scientific and regulatory abyss with the potential for future litigation looming in the distance. Companies that delay nanotechnology innovation awaiting safety consensus or regulations risk falling behind the competition. While these tiny materials and processes are big business, many risk managers and insurance buyers haven’t fully considered potential risks to employees, consumers and the environment, resulting in workers compensation, product liability and environmental liability exposures. Company risk managers and insurance buyers would value and benefit from knowledgeable broker and agent guidance. Application and control strategies considered now may have far-reaching future implications.
Nano insurance issues have received a lot of renewed interest lately. This should be a great conference on the topic and is open to the public. Hope to see you there.
The Nanotechnology Health and Safety Forum which is being sponsored by Battelle, Porter Wright, University of Washington, University of Oregon, Oregon State University, and several others is taking place on June 8 - 9, 2009 at the Edgewater Hotel in Seattle, Washington.
Keynote speakers include: Dr. Leroy Hood, Co-Founder of the Institute for Systems Biology; Dr. Kenneth Dawson, Director of the Centre for BioNano Interactions; Dr. Justin Teeguarden Senior Research Scientist at Pacific Northwest National Laboratory and recent co-author of the NRC's assessment of the NNI's EHS research strategy; Dr. Vladimir Murashov from NIOSH; Dr. Saber Hussain from the Air Force Research Laboratory; former U.S. Congressman George Nethercutt; and Dr. Robert Tanguay from Oregon State University.
The program has 4 units: Framing the Unknown; nanoEHS Perspective; Insurance, Nanotechnology, and Risk; and Nanotechnology: The Next Ten Years.
I will be speaking on the Insurance, Nanotechnology, and Risk panel on the second day of the conference along with Steve Knutson from Zurich North America; Walter Andrews from Hunton & Williams; and William E. Barr from Chubb Insurance.
You can sign up for the conference here. Hope to see you there.
Battelle Memorial Institute, the University of Washington, and the University of Oregon are co-sponsoring the international Nanotechnology Health and Safety Forum (NHSF) in Seattle, Washington on June 8 - 9, 2009. The NHSF is coinciding with the first world-wide meeting of the International Organization for Standardization (ISO) TC 229 -- Nanotechnologies being held in the United States, and will take place at the Bell Harbor International Conference Center.
Topics covered at the NHSF will include:
- The EHS Progress Report: today's status and tomorrow's next steps
- International Standards: developing a timeline & milestones
- Navigating Regulations: encouraging dialogue between Europe, Asia, and the U.S.
- Safety Guidelines: state of the science and recommended occupational safety guidelines for working with nanomaterials
- Managing Risk: the insurance industry perspective
- What's New: current activities of innovative nano-manufacturers
I have been invited to speak on the insurance/managing risk panel along with speakers from Riddell Williams, Hunton & Williams, Zurich North America, and Chubb Insurance:
The availability of insurance for entities using nanotechnology is critical to the further development and application of nanomaterials in industry. Yet the widening use of nanotechnology (while toxicology remains to be determined) is a central concern for the global insurance industry. Insurance, Nanotechnology, and Risk addresses the prospects for managing nano risk through the perspectives of a Silicon Valley loss control specialist, a major international underwriter, and liability / coverage counsel.
This should be a great conference with an international focus; plus Seattle in June is going to be a lot of fun. Hope to see you there.
Published in the March 2009 issue of Environmental Science & Technology, this article discusses the difficulties insurance companies are having in assessing the risk to themselves in insuring manufacturers using nanomaterials in their products, particularly carbon nanotubes, due to a lack of reliable data on the potential effects of nanomaterials on the environment, workers health, and product liability. While some companies have made the decision to exclude nanomaterials from coverage, companies such as Swiss Re and Lloyds of London are recommending that insurers issue short term coverage as a way of avoiding latent claims . The article is available at http://pubs.acs.org/doi/full/10.1021/es900041e
Earlier today, Continental Western Insurance Group issued what appears to be one of the first nano-specific commercial insurance exclusions in the United States. Although Continental originally posted the exclusion and two supporting documents on its website, the materials were removed after BNA published an article about the exclusion this morning. We managed to print out the material before it was taken down and we provide links to it in this article.
A summary of each of Continental's three documents follows:
Background on Nanotubes
Continental's "Background on Nanotubes" document explains the policy behind its exclusion:
"The intent of this exclusion is to remove coverage for the, as of yet, unknown and unknowable risks created by products and processes that involve nanotubes. The exclusion is being added to make you and your customers explicitly aware of our intent not to cover injury and/or damage arising from nanotubes, as used in products and processes…"
The primary reason for the exclusion appears to be recent reports comparing carbon nanotubes to asbestos. You can find information about the press coverage of the May 2008 articles comparing multi-walled carbon nanotubes to asbestos here. Another factor in Continental's decision appears to be the often cited nano consumer product inventory published by the Project on Emerging Nanotechnologies.
Based on the asbestos analogy and PEN's product database, Continental concludes that it "would not be prudent for us to knowingly provide coverage for risks that are, as of yet, unknown and unquantifiable. We are all too aware of what happened to companies involved with asbestos-related exposure in the past, and see this as a very similar issue."
Continental's draft Notice to Policyholders makes it clear that it covers most of Continental's insurance groups, including: Acadia Insurance Company; Continental Western Insurance Company; Fireman's Insurance Company of Washington, D.C.; and Union Insurance Company. The notice references the actual exclusion which is attached and explains that this "endorsement excludes bodily injury, property damage, and personal and advertising injury related to the exposure of nanotubes and nanotechnology in any form. This include the use of, contact with, existence of, presence of, proliferation of, discharge of, dispersal of, seepage of, migration of, release of, escape of, or exposure to nanotubes or nanotechnology."
The exclusion itself reiterates that this "endorsement excludes bodily injury, property damage, and personal and advertising injury related to the exposure of nanotubes and nanotechnology in any form. This include the use of, contact with, existence of, presence of, proliferation of, discharge of, dispersal of, seepage of, migration of, release of, escape of, or exposure to nanotubes or nanotechnology."
It further contains specific exclusions for "existence, storage, handling, or transportation of 'nanotubes' or 'nanotechnology'…any manufacturing processes or products including same, and any losses arising from lawsuits related to 'nanotubes' and/or 'nanotechnology.'"
The exclusion defines "nanotubes" as "hollow cylinders of carbon atoms or carbon fibers or any type or form of "nanotechnology" which contains remarkable strength and electrical properties used in any products, goods, or materials. "Nanotechnology" is defined as "engineering at a molecular or atomic level."
Both definitions are vague. For example, a hollow carbon fiber fishing rod that makes no claim to contain nanoscale materials would still technically be included in the definition of 'nanotubes" because it is a hollow cylinder made of carbon atoms. Similarly, attempting to entirely exclude "nanotechnology" is unworkable because it is really just science on an extremely small scale.
Rather than excluding all "nanotechnology," Continental more likely meant to exclude all nanoscale materials. Even then, such a blanket exclusion would be extremely broad because many nanoscale materials have not been shown to pose any environmental, health, or safety risks. Further, even within the category of carbon nanotubes, recent researchers' warnings about potential EHS risks have been largely confined to long, thin, needle-like carbon nanotubes, while excluding other varieties.
Stay tuned. We will attempt to find out what happened to Continental's documents and will continue to monitor nano-related insurance coverage issues.
Lloyd's of London recently issued another nano-related insurance document: D. Baxter, "Nanotechnology: An insurer's perspective," Emerging Risks, Lloyd's of London.
First, Lloyd's notes that several types of insurance may be impacted by potential EHS risks related to nanotechnology including: (i) professional indemnity, (ii) medical malpractice, (iii) director's and officer's liability, (iv) general liability, (v) employer's liability, and (vi) product liability.
Lloyd's then identifies several possible coverage options for insurers seeking to deal with these potential risks:
- Monitor and research emerging risks. Lloyd’s notes this approach cannot fully account for the danger of unforeseen, unanticipated risks.
- Price adequately and hold additional capital. Under this scenario, an insurer would not treat nanotechnology as a separate risk, increase premium prices to encompass any new risk and increase capital reserves accordingly.
- Exclude. Lloyd's notes insurers could totally exclude coverage for nanotechnology businesses. In that case, Lloyd's notes that exclusions must be well worded and enforceable to be effective. Lloyd’s also notes that the downside to this approach is that it "does not allow the insurer to acquire historical data to price for allowing cover in the future."
- Exclude and write back with limited cover. Under this scenario, an insurer would exclude nanotechnology from full coverage and then provide written separate limited coverage for those risks.
- Only accept claims within a fixed period. This approach would protect insurers against latent claims that appear years after a policy is written.
Finally, Lloyd's recommends insurers ask their nano-insureds the following questions: (i) what nanotechnologies does the company use?: (ii) what are the known hazards of those materials?; (iii) what are potential hazards of those materials?; (iv) has the material's toxicity been studied?; (v) has its environmental impact been studied?; (vi) does the company follow any voluntary nano-specific EHS guidelines? (vii) has the company performed a life-cycle assessment related to its use of nanomaterials?; and (viii) does the insured advise its customers about its use of nanotechnology?
Earlier this week Lloyd's Emerging Risks Team published a 26-page report entitled "Nanotechnology: Recent Developments, Risks and Opportunities." At the outset, Lloyd's notes its "report aims to provide an up-to-date view to inform the . . . insurance industry about the risks and opportunities that may exist in this developing area," and is intended to "enable insurers to make better informed decisions regarding any nanotechnology risks they may have written or intend to write." A short review follows.Continue Reading...
The insurance industry makes a great effort to research and identify potential liability trends. In a recent Orlando Sentinel article, a commercial insurance expert expressed concern that the explosive growth of nanotechnology could have unintended health consequences, and if it proves harmful, “lawsuits will fly.” Frank Coyne -- CEO of Insurance Services Office Inc. -- addressed this issue as part of his recent presentation at the ISO Tech 2006 conference in Kissimmee, Florida.