Nanotechnologies offer many promises in terms of technological advancement, yet associated with all new technologies are also potential risks in terms of health and environmental safety. A key part of dealing with such risk, in financial terms, is through insurance; indeed insurance is in many countries a legal obligation. As a result, an insurance provider is an important stakeholder and, as recently described by Bergamaschi et al. (2015), to a great extent such providers function as a proxy regulator by influencing work practices. It is thus clear to see that insurability of a new technology is paramount for its successful development and sustainability.
There are, however, many challenges for the insurance sector in nanotechnology and indeed any new technology where information on potential risks is limited and at times conflicting yet innovation continues at a pace. In these circumstances, the potential risks and lack of information leave the underwriter in a difficult position which can have a concomitant impact on the cost of insurance or even call into question insurability, potentially hampering development of nanotechnology as an emerging sector.
For a new technology to expand in a sustainable way requires its insurability. In a recent Nature Nanotechnology article, Mullins et al. (2013) clearly exposed the main challenges the insurance industry are facing in order to support the growth of nanotechnologies. The authors highlighted the lack of knowledge on potential risks associated with the use of nanomaterials and proposed a way to go forward to resolve the issues. Mullins et al. insisted on the importance of communication between nanotechnology firms and insurers for the risk transfer to insurances to develop nanotechnologies. Firstly, the authors emphasised the need for clarity in terms of definition for nanotechnology and to name specifically this technology within insurance contracts. Indeed, if firms start to use materials at the nanoscale there is the possibility that their activities may no longer be covered by their insurance provision as this may be regarded as a material change, for which the insurance company should have been informed of. These precisions in the insurance contract would also help the insurance companies “to monitor and record the development of potential nanotechnology liability claims” (Mullins et al. 2013). Secondly, the authors proposed the use of a control-banding framework approach as a tool to help decision making by underwriters; addressing key concerns over uncertainty and perhaps reducing costs by more accurate assessment, thereby reducing excess precaution. Moreover this control banding tool could also be used by the industry for better risk assessment and management and to eventually decrease their insurance overheads.
The recently completed EU Framework Programme (FP) 7 project 'Sanowork' had as its main remit to develop and identify safe occupational exposure scenarios by identifying and mitigating risks to make selected industrial processing lines inherently safe-by-design. One of the major aims of this project was the development of risk insurance models that could be readily usable by the industry. This specific part of the project was led by researchers from the University of Limerick who have strong expertise in the insurance area. The industrial processing lines were studied in terms of exposure, hazard and finally risk (Bergamaschi et al. 2014) - information which was then fed into a control-banding framework. This framework was developed and improved into a more predictive and reliable model to fulfil the needs of underwriters in terms of decision-making to rank risk acceptability and to relate insurance premium with specific scenarios. Overall, this work highlighted the importance of data gathering in terms of physico-chemical characterisation and toxicity, and information transfer to insurance companies to allow the process of insurability of nanotechnology.
In March 2015, during the Nanotechnology Liability Forum, Gen Re in partnership with The Innovation Society presented a monitoring system of nano risks. This monitoring system consists of the gathering of scientific data on nanomaterials using nine criteria that subsequently allow drawing their risk profiles, and can be easily populated with new information to ensure that the risk profiles are kept up to date. Moreover, this monitoring system of nano risks also takes into account information such as regulation of the nanomaterials as well as the perception/reputation of nanoproducts on the market which also critically influence their insurability.
Information transfer to insurance is critical and several recent initiatives have shown great potential to allow insurance to support the sustainable development of nanotechnologies.
SAFENANO/IOM was one of the partners in the Sanowork project, and was involved in the hazard identification of the materials, development of the control banding tool development, and the risk evaluation.
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Bergamaschi, E., Murphy, F., Poland, C.A., Mullins, M., Costa, A., McAlea, E., Tran, L., Tofail, S. 2015. Impact and effectiveness of risk remediation strategies on the insurability of nanomaterial production: Evidences from industrial case studies. Wiley Interdiscip. Rev. Nanomed. Nanobiotechnol., [epub ahead of print].