Laying the Foundations for Effective Nano Risk Management [Video]
Nanomaterials have fast become a fact of life for all kinds of businesses. Today, they are used widely in manufacturing processes with their properties exploited for pharmaceuticals, medical devices, cosmetics and clothing. They’re even used extensively in food and food packaging.
It’s estimated that global production of nanomaterials is already around 11 million tonnes a year, and that by 2017 the global nanomaterials market will be worth 37 billion USD.
The commercial opportunity that nanomaterials present is immense, but it’s one that comes with significant risk attached. While as yet there may have been no known nano-related losses, on the basis of animal experiments strong signs suggest that some nanomaterials could have negative effects on human health and the environment.
It is therefore not surprising that nano risk is a growing area of concern for insurers. Lines of business potentially affected include Employers’ Liability (in markets where this is the object of commercial insurance), General Liability including Product Liability, and Environmental Liability.
Employees who come into direct contact with nanomaterials are considered to be one of the groups at greatest risk. In the EU alone, the nanotechnology sector employs as many as 400,000 workers producing a wide spectrum of goods.
Meanwhile, the extensive production and use of nanomaterials in consumer products represents potential accumulation risk for insurers.
Due to the heterogeneity and breadth of nanotechnology applications - coupled with the ongoing controversy regarding their safety - there is little transparency concerning potential nano risks in the portfolios of individual insurance companies at present.
The lack of regulation surrounding nanomaterials only adds to the uncertainty for insurance companies. Regulators seem unable to keep up with the rapid development of nanomaterials and their uses. While the EU has partially reacted with some provisions, the U.S., for example, currently has no specific declaration requirements for nanomaterials.
Regardless of the existing complexities, for insurers in Europe at least, the prudent and transparent management of nano risks is about to become compulsory. Solvency II calls for the establishment of a risk management policy that covers all material risks, including emerging risks, as part of ORSA (Own Risk and Solvency Assessment). Our view is that nanomaterials are a potential emerging risk, and that insurers should take firm steps to identify, monitor and assess nano risks present in their portfolio.
At Gen Re we are taking a proactive approach to nano risk management and last week saw the launch of our new nano risk monitoring system in Cologne, Germany. The system is specifically tailored to insurance and the complex risk-return profile of nanomaterials.
In partnership with The Innovation Society, we’ve targeted the nanomaterials in three important industry sectors and evaluated them based on criteria such as toxicity, regulation, reputation and cumulative risk potential. To ensure the latest information is included in the risk profiles, monitoring will be performed on a continuous basis.
Our objective is to support insurers to objectively identify, understand and manage nano risks in order to support their clients and stay relevant in the nanomaterials space.
Further activities are planned in Europe for the coming months. If you would like to hear more in the meantime please contact your Gen Re Account Executive.