Even though nanotechnology may not have resulted in any litigation yet and is widely used, many insurers exclude its application in their fine print. However, as its benefits become clearer, some insurers are revisiting their position
When nanotechnology started to be used more often in manufacturing, appearing in myriad everyday products from food and drink to tennis racquets and giant aircraft, the insurance industry was wary of the risks it might present. Many companies excluded any liability from nanotechnology in unequivocal terms.
A certain US company applied the following clause in 2008: “this endorsement excludes bodily injury, property damage, and personal and advertising injury related to the exposure of nanotubes and nanotechnology in any form. This includes the use of, contact with, existence of, presence of, proliferation of, discharge of, dispersal of, seepage of, migration of, release of, escape of, or exposure to nanotubes or nanotechnology.”
Since then, the situation has not evolved within much of the insurance industry. Even though no litigation has arisen from the application of nanotechnology or its variants in terms of public or other liability, many firms still exclude it in the fine print.
However, the demonstrated usefulness of the science in many applications is universal. Although the majority of the public will be unaware of this, nanotechnology is responsible – or at least plays a part in – the production of everyday consumer items such as food, sports equipment, clothing, mobile phones, household products and cosmetics, even heavy duty manufacturing such automotive components and aerospace.
Nanotechnology is so important industrially that the value of products underpinned by it are expected to reach €2trn this year. In Europe alone, the sector employs 300,000-400,000 people.
Despite its widespread use and promise, the insurance industry’s caution over nanotechnology was to some extent understandable because of the unknown effects of a highly elusive element that lies somewhere in size between an atom and a virus. After all, as Amanda Kennerley, AIG senior casualty underwriter for the EMEA region, points out, “nanotechnology [involves] a process of manufacture and not a product”.
Moreover, the issues raised by the widespread application of such a substance are certainly significant by any standards, and they remain so. What might, for example, be the implications arising from claims for product liability in the event of effects on consumers’ health?
There is also the issue of employee safety from a substance whose structure is similar to asbestos (carbon nano- tubes).
However, after a period of reflection that involved hard-headed analysis in consultation with the scientific community, a handful of insurers such as AIG concluded that it would be short- sighted to ignore whatever risks nanotechnology may present.
“It was essential to educate ourselves and to understand nanotechnology and not to be merely reactive,” reflected Kennerley.
It is demonstrable that nanotechnology has benefits to manufacturing and indeed to mankind.
It is a great scientific breakthrough, although the insurance industry needs to be mindful and keep watch as this novel aspect of science continues to develop. For instance, nanotechnology can be harnessed in the pursuit of cancer-seeking drugs.
Further, in the aerospace sector, the science – nanotechnology-derived graphenes are thinner than paper but many times stronger than steel – plays an important role in energy-saving. Nanotechnology is all-pervasive and found in materials from building materials to food packaging.
As we learn more about it, the benefits of nanotechnology are steadily becoming clearer.