Wednesday, 9 July 2008

Nanotechnology: Liability risks on par with asbestos?

Advisen published a briefing written by Research Analyst Johanny Cruz (contact) which details the scope of the commercial market for this emerging technology, the potential risks involved, the research underway to measure the potential exposures, and how the insurance industry is handling the potential liability.

A quick look at Advisen's Policy Form Repository and Clause Comparison Tool would show that the industry is likely to exclude this liability until products can be developed.

Recent press coverage on the report include Bermuda's Royal Gazette (story here) and Strategic Risk (here). Excerpting from the report (which can be purchased by calling +1.212.897.4800):

Lines of insurance potentially impacted by nanotechnology include:

  • Workers compensation insurance: coverage for employees involved in developing,synthesizing and processing engineered materials, as well as workers using engineered nanomaterials in their jobs.
  • General and products liability insurance: exposure to loss from users of products containing or releasing nanomaterials.
  • Product recalls insurance: the cost of recalling a nanotechnology product with unacceptable claim experience or safety defects.
  • Environmental liability insurance: damage caused to the environment from engineered nanomaterials released intentionally or accidentally.
  • Property insurance: the fine particle size of engineered nanomaterials could cause ignitable dust to form.
  • Medical malpractice insurance: physicians and hospitals using nanoengineered medical products face potential liability for errors and unforeseen negative outcomes.

While nanotechnology holds enormous promise, the risks associated with these new processes and materials are still largely unknown. The insurance industry is only now beginning to assess the liability issues ... and a lack of insurance availability could stifle innovation and slow the introduction of valuable new products.

The current exposure to manufactured nanoparticles is mainly concentrated in workers in nanotechnology research and in nanotechnology companies. The US national nanotechnology initiative has estimated that around 20,000 researchers are working in the field of nanotechnology.

However, according to a report released by the International Council on Nanotechnology, only about one in three manufacturers of nanotechnology conducted monitoring for exposure to substances.

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