By DAN REYNOLDS, senior editor of Risk & Insurance®
One of the most unnerving things about nanotechnology risk from an underwriter's standpoint is that there is this vast intuitive sense that nanotechnology could cause harm, but there is so little data to support solid underwriting or much underwriting at all for that matter.
"Insurance is a risk assessment and actuarial underwriting business," said Ron Wernette, a partner in the Minneapolis-based law firm of Bowman and Brooke.
"One of the problems is the unknown unknowns," Wernette said. "There are always some in any business, but you do the best you can and you see how the claims history works."
And that's just the thing. There just isn't enough data for insurers to figure out what to do with nanotechnology.
"We do know that the large commercial insurance companies, knowingly or unknowingly depending on what they know about their insured's business, are assuming the risks with nanotechnology and they are extending a significant amount of capital," Wernette said.
The bind created by nanotechnology is that it is so well thought of in so many applications. Its properties lend strength and flexibility to materials and precision treatments in the medical field, where it also holds promise in pinpointing treatment for cancer or delivering just the right amount of a psychotropic drug to a psychiatric patient.
The rub, though, is the very breadth of nanotechnological processes, and the speed at which they have been incorporated.
"The power to manipulate matter has grown enormously in the last few decades," said Trevor Maynard, a manager for emerging risks with Lloyd's. "We can now literally create structures in the form that we want them."
Insurers can't just write exclusions on this risk because nanotechnology is too widespread. Especially not at a time when the market is soft and competition is so fierce in so many lines.
Clarity does exist around where this risk could really have teeth, when the fates decide to bite down. That is in the area of product recalls and product liability.
"Product liability is the big one because the number of nanomaterials that are entering into the consumer-product stream is getting larger and larger, and we are not fully conscious of it," said Robert Blaunstein, a vice president of environmental, west, with Markel
May 1, 2011
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