Filed Under:Markets, E&S/Specialty

In Nanotechnology, Actuaries May Make the Unimaginable Insurable

The nanotechnology industry is increasing in its potential to cure and cause environmental havoc, but can insurers keep up with the risks of a fast-growing market that may generate about one trillion US dollars in the next two years? 

 “An emerging technology can leave insurers covering risks they never contemplated,” states the Casualty Actuarial Society (CAS) in a statement on this revolutionary occupation.

Parr Schoolman, a CAS fellow and senior managing director at Aon Benfield, explains that despite the lack of definitive data on the nanotech industry, an actuary’s ability to analyze a situation can help insurers develop a product to cover a futuristic technology that has arrived on society’s doorstep.

“Working with limited data is exactly the area where actuaries add most value,” says Alex Krutov, president of Navigation Advisors, in an email to PC360. “In general, the ability to provide solid actuarial risk analysis can also help accelerate societal progress by making possible the development and introduction of new technologies and products that otherwise might be considered uninsurable and too risky.”

A lack of clarity abounds within the applications of insurance to nanotechnology products and firms: standard policies don’t necessarily exclude nanotech products; but would courts apply policy pollution exclusion to a claim?

Krutov says, “Medical applications of nanotechnology are very promising.  At the same time, health and other risks of specific products based on nanotechnology have to be properly analyzed before any insurance underwriting decision is made.  While actuaries are not expected to be experts on nanotechnology or medicine, they provide the general framework for this risk analysis.”

According to the Center for Responsible Nanotechnology, nanotech is the science of engineering functional systems—entire machines, robots and computers—that are smaller than a living cell.

There are now more than 5,400 nanotech firms global, writes CAS; each state in the U.S. houses at least one company that engineers micro-scale products ranging from anti-aging cosmetics to pesticides, drink mixes and drugs. Nanotech can one day provide deep-reaching pharmaceuticals and cancer treatments, and more sustainable energy sources. 

“A lot of really wonderful things are going to happen because of nanotech,” says Charlie Kingdollar, vice president and emerging issues officer of General Reinsurance Corporation.

But he continues, “We’re not spending a whole lot of time and money on environmental safety.”

Because nanotechnology has only been available since the 1984, and due to the cutting-edge speed at which it is being developed, reliable data describing its effects is often outdated. Furthermore, Kingdollar says more than 60 percent of firms and universities fail to conduct toxicity tests on nanomaterial.

According to the United States Environmental Protection Agency (EPA), nanomaterials are effective precisely because their size allows them to enter the body in ways not typically found in other chemicals: for example, through the blood-brain barrier or by crossing cell membranes.

On the other hand, in pharmaceutical applications, nanotech particles have been linked to unintended impacts leading to brain, liver and skin cell death in mice and in humans. Carbon nanotubes have been found to cause asbestos-like side effects, and in environmental engineering, nanomaterials are feared to be able to interact with pollutants to produce toxic by-products. 

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