Lloyd's of London & Nano

Posted on November 28, 2007 by Michael E. Heintz

No, I'm not talking about the insurance policy that you may need for buying that big holiday gift.  Rather, I'm talking about the conference that Lloyd's of London has scheduled to discuss nanotechnology risks in the context of insurance.

On December 10, 2007, in the Old Library at Lloyd's, the company and Lighthill Risk Network will hold a conference to examine "the risks and opportunities of nanotechnology."  Included in the conference will be experts from various fields to discuss nanotechnology developments throughout the industry.  Lloyd's has already released one article on the subject, and plans to release a report in December to analyze nanotechnology issues.  More information on the conference, and Lloyd's Emerging Risks Group can be found here and here.

Insurance companies are beginning to analyze the unique issues presented by nanotechnology in society.  Given the industry's previous encounters with risks such as asbestos and environmental contamination of real estate, its understandable that insurers may be more wary of this new technology.  Life everyone else though, insurance companies are only now starting to be able to assess the risks associated with nanomaterials, and most find themselves in the same position of the rest of us: what to do in the absence of regulation?
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Nano-Insurance Underwriting Challenges

Posted on January 18, 2007 by John C. Monica, Jr.

Robert Blaunstein recently published an article in Insurance Networking News: “Unfamiliar Exposure: Nanotechnology deals in tiny particles, but its potential risk to insurers is sizable and nearly impossible to calculate.”   The article begins by noting the "enabling" role the insurance industry has often taken with new technologies. Dr. Blaunstein argues this "enabling" function is fulfilled by when insurance companies help businesses manage product risks. In order to play this role with the nanotechnology industry, Dr. Blaunstein argues insurers need to better understand nanotechnology and “have access to accurate data and information that permit a questionable evaluation of the probability and severity of losses.”  He also advocates government regulation over the use and disposal of harmful nanomaterials.

The article goes on to explain the insurance industry’s risk analysis regarding nanotechnology is lacking because of the: (i) large number of uses of nanomaterials in a “broad array of activities;" (ii) lack of existing data regarding specific risks posed by nanomaterials. Given these uncertainties, Dr. Blaunstein believes insurance coverage for the nano-industry will evolve in three stages:


• Early Study Period. The insurance industry is currently in this stage, which is an effort to assess potential risks and insurance exposures. During this period, Dr. Blaunstein believes nanotechnology risks may already be covered by product liability, worker’s compensation, professional liability, and general liability insurance policies.


• Apprehensive Phase. Serious concerns develop and “insurers and reinsurers begin to look at reducing” coverage. The industry seeks to contain risks through the use of “sub-limits” and “claims made” coverage.


• Mature Phase. Insurers understand the risks and potential losses posed by nanotechnology and offer “customized solutions” . . . “at reasonable rates in both the insurance and reinsurance markets.”
 

Dr. Blaunstein closes by urging insurers to embrace an “enabling” role with nanotechnology and to work “with manufacturers, the government, scientists and regulatory agencies to identify and quantify nanotechnology’s risks.” Additionally, he believes, “[s]tandard, affordable coverage will eventually be available. In the meantime, by using claims-made forms and setting appropriate deductibles and limits that are commensurate with unknown risks, insurers can mitigate their potential losses and still participate in this exciting new market.”
 
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