As nanotechnology brings a wealth of new opportunity to the world, the job for insurers is to strike a balance between understanding the risks involved and supporting progress. We take a look at the latest thinking on the issue, and find that risky things come in small packages.
From medicine that can deliver the right amount of drugs directly to the brain, to self-cleaning windows and military clothing that withstands chemical or biological attacks, the potential of nanotechnology is huge.
But its countless applications and the lack of research into how it could affect the environment and human health are major issues for insurers.
Nanotechnology can be used across many industries, including computing, engineering, and pharmaceuticals. It is already being used in products such as cosmetics, disinfectant, air-fresheners, dyes, certain types of glass and paints.
And to say it is small would be putting it mildly. It involves the use of nanoparticles and nanotubes, and nanoparticles are so small that a human hair would have to be split 80,000 times before it reached a width of one nanometre.
According to Swiss Re's study Nanotechnology: small matter, many unknowns, some nanotubes, are similar in form and size to asbestos fibres. "There are indications that certain nanomaterials are potential health hazards,” the study says. “The danger is most probably of a chronic nature and it could be some time before it manifests itself."
And however it is used, each application of nanotechnology presents its own problems. Michael Bruch, senior Risk consultant at the Allianz Centre for Technology, explains: “Nanotechnologies can be applied in all sectors, from the car industry through to medical uses, and the challenge for underwriters is to understand all the specific risks involved. Also, there are many applications which use nanotechnology but are not labeled, and this can be a problem.”
Thomas Epprecht, senior risk specialist, emerging technologies at Swiss Re, adds that nanotechnology will change the risk landscape. He says it might change liability issues for insurers, particularly if concerns about long-term losses similar to those caused by asbestos are raised.
But with risks also come opportunities. “Because nanotechnology is used in many industries, there are many commercial clients who are active in this field,” says Bruch. “We believe that over time our insurance portfolio will have an increasing number of nanotechnology-related products. This is a great opportunity, especially for small and medium sized enterprises, but adequate insurance is important for their business.”
At the moment, according to Bruch, companies are not having problems buying insurance cover, as there are no specific exclusions concerning nanotechnologies and not enough scientific evidence about the dangers. However, he points out: “What the insurance industry is missing is well organised and systematic independent research on the impact of nanotechnology on the environment and how the different uses of nanotechnology could impact on individuals’ health.”
Epprech says that the industry is still in the learning phase. “Insurers need to understand the risk which they are insuring,” he says. “There should be a close collaboration and dialogue between insurers and all stakeholders about technical and societal risks that might arise. More risk research needs to be done, and tests need to be standardised as you cannot compare results if each research group uses different methods and procedures.”
Whatever the risk the new technology may pose, with so many promising and positive uses, nanotechnology is here to stay. There has been an extraordinary amount of investment in it worldwide – government spending increased from £0.25bn in 1997 to £1.7bn in 2003. And US experts estimate a global market in nanotechnology of $1 trillion by about 2015.
