Building materials incorporating nano-particles may better withstand extreme events, but insurers worry about the liability implications of nanotechnology
A micrometre is one millionth of a meter, the width of typical bacteria. A nanometre is smaller still: each micrometer contains 1000 nanometres (nm). The diameter of a DNA helix is 2nm and viruses range in size from 20nm to 450nm. It may seem incredible, but scientists and engineers have now managed to manipulate matter on this scale; and this has been named nanotechnology.
Some believe that nanotechnology could transform society, predicting a revolution on the same scale as has occurred with silicon technology and microprocessors. The insurance industry could benefit from this in terms of a new and potentially large industry to insure. It may even benefit more directly from lower claims because the new materials are stronger and more flexible than ever before.
Stronger materials will protect buildings and vehicles from damage. Medicines could be applied more precisely and diseases diagnosed earlier using more sensitive instruments.
It may surprise people to realise that nano technologies are already widely used. Research suggests that the market size of products currently incorporating nanotechnologies is in the tens or possibly low hundreds of billions of dollars. There are predictions that by the middle of the next decade some 15% of globally manufactured goods will contain nanotechnology.
The big questions
The Project on Emerging Nanotechnologies, set up in part by the Woodrow Wilson International Centre for Scholars, is keeping a nanotechnology consumer products inventory. As of October 2007, there were 580 products in the database, an increase of 175% since March 2006. The biggest category, with 61% of products, is health and fitness, which includes clothing, cosmetics and sunscreens. Food and beverage products, including food supplements, make up 11% of the database.
The most common nano-particles used in products are silver and carbon. Silver is used mainly for its anti-microbial properties. Carbon has many applications, but it is used mainly for strength or wear-resistant enhancement of materials and its electrical properties. Products are rarely 100% nanotechnology; nano-particles will be added to a product and form a part of it.
There are concerns though. One problem is that the pace of change is outstripping the pace of research into environmental or health effects. A workshop organised by the Royal Society in 2005 called for urgent research into these effects. Results are starting to come in; but there are still significant gaps in our knowledge. Nano-particles may behave very differently than larger volumes of the same substance. For example, we use copper pipes for our home plumbing because it is believed to be safe, yet one researcher has shown that copper nano-particles are harmful to aquatic life. Might humans also be affected? How could we clean up nano pollution when the particles in question are smaller than our filters?
The insurance industry suffered massive claims from pollution, and asbestos and other health related issues. There is a danger that nanotechnologies will lead to similar latent claims, but lack of research means that, we do not know what the effects might be or how widespread. Particles can be taken up by plants and soil or carried by water over wide areas, particularly following flooding, which is itself set to become more prevalent in the future. The UK Council for Science and Technology has noted that there are worryingly few studies on toxicology, health and environmental issues.
There is no specific regulation for nanotechnologies. Some believe this is appropriate, while others think that the technologies are so different from their traditional counterparts that more targeted rules are essential. The European Union is treading carefully, whereas in Japan and the United States they have embraced the new technologies more openly. The insurance industry may be concerned that a lack of regulation leaves the door open for litigation in years to come; and costs which ultimately liability insurers may be required to pick up. Whether the correct response is to bring in exclusions is something the industry should carefully consider; particularly when the magnitude of the exposure is unknown, but potentially very large. Continuing research and monitoring of this issue are vital.
The Lighthill Risk Network held one of its risk related conferences on the subject of nanotechnology at Lloyd's on 10 December 2007. Expert speakers covered subjects on toxicology, legal issues, health and pollution. Subscribers to the network can find more details at www.lighthillrisknetwork.com. Lloyd's has also published a detailed report on the subject which can be found on www.lloyds.com.