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

“An emerging technology can leave insurers covering risksthey 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 AonBenfield, explains that despite the lack of definitive data on thenanotech industry, an actuary's ability to analyze a situation canhelp insurers develop a product to cover a futuristic technologythat has arrived on society's doorstep.

“Working with limited data is exactly the area where actuariesadd most value,” says Alex Krutov, president of NavigationAdvisors, in an email to PC360. “In general, the ability to providesolid actuarial risk analysis can also help accelerate societalprogress by making possible the development and introduction of newtechnologies and products that otherwise might be considereduninsurable and too risky.”

A lack of clarity abounds within the applications of insuranceto nanotechnology products and firms: standard policies don'tnecessarily exclude nanotech products; but would courts applypolicy pollution exclusion to a claim?

Krutov says, “Medical applications of nanotechnology are verypromising. At the same time, health and other risks ofspecific products based on nanotechnology have to be properlyanalyzed before any insurance underwriting decision is made. While actuaries are not expected to be experts on nanotechnology ormedicine, they provide the general framework for this riskanalysis.”

According to the Center for Responsible Nanotechnology, nanotechis 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 engineersmicro-scale products ranging from anti-aging cosmetics topesticides, drink mixes and drugs. Nanotech can one day providedeep-reaching pharmaceuticals and cancer treatments, and moresustainable energy sources.

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

But he continues, “We're not spending a whole lot of time andmoney 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 anduniversities fail to conduct toxicity tests on nanomaterial.

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

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