The development of nanotechnology is still in its infancy, but the insurance industry has its work cut out to understand the risk issues surrounding this uncharted territory. Michael Faulkner investigates
Once the realm of science fiction, the development of nanotechnology (the manipulation of molecules) is gathering pace. Already used in areas such as textiles and computers it could give rise to such marvels as food wrappers that detect biological contaminations and miniature robots that can repair the human body.
But the rise of nanotechnology poses a considerable challenge for the insurance industry. The long-term behaviour of nanoparticles is unclear. No one knows the extent to which they pose a threat to human or environmental health.
In July leading academics and scientists published a report calling for tighter regulation of nanotechnology in order to ensure long-term safety. The report of the Royal Society and the Royal Academy, commissioned by the government, said that more formal research was "urgently" needed to assess the possible adverse health, safety and environmental impacts.
Long-term behaviourA key problem arising from nanotechnology is that materials have different physical, chemical and biological properties at a particle scale than they do at larger dimensions. While these new properties can lead to innovative products, there is a need for greater certainty with regard to possible toxicity or pollution.
Of particular concern is the unknown long-term behaviour and mobility of nanoparticles. How will the particles behave in the body or environment?
Annabelle Hett, a risk expert at Swiss Re, says: "The mere presence of nanoparticles, even if they are everywhere, does not pose a threat to people or the environment. A risk can arise only if some of the particles' properties turn out to be harmful. But insufficient research has been done to say with any certainty whether, and if so to what extent, nanoparticles or products containing nanoparticles actually pose a threat."
Many questions arise from the use of nanoparticles that will need to be answered if the risks associated with them are to be properly established. For instance, how will the changed chemical properties of nanoparticles affect the human body if they are used in concentrated form, as in medicines or sprays? What happens to the accumulated particles that have already been detected in some organs? How do these particles behave on or in the organism? "The answers to these questions have yet to be found," says Hett.
The volume of investment in nanotechnology has increased rapidly in recent years, and the range of products containing nanomaterials is growing. These particles can now be found in cosmetics, medical applications, packaging materials, electronic products or as coatings that are used to render products UV-resistant, stain-repellent or self-cleaning.
In the future, nanoscience may lead to new ways of targeting drugs to specific parts of the body, using artificial implants and tiny sensors, for health screening and security.
Hett argues that the introduction of nanotechnology will cause a "paradigm shift" in industrial application and exposure mechanisms. "It is likely that in the course of its entire evolution, humankind has never been exposed to such a wide variety of substances that can penetrate the human body apparently unhindered," she says.
"The insurance industry must conduct a careful analysis of nanotechnology in order to identify where any problems might be."
But it will not be an easy task, says Hett: "The manufacture and use of nanomaterials will spread rapidly. And there are no long-term loss statistics available, so the insurance industry will need to observe developments closely in order to establish an acceptable basis for risk assessment. The extent of potential claims will be difficult if not impossible to determine."
In order to properly assess the risk from nanotechnology, underwriters will need to have exhaustive knowledge of possible entry routes into the body. Human contact with nanoparticles can take various forms: they can be inhaled with air, swallowed, and may possibly enter the body via the skin.
"Underwriting risk analyses of products are all the more stringent the closer the products come into contact with the body, since this means their potential to impair health is generally greater," says Hett.
"Special attention is paid to particularly vulnerable organs such as the brain, because foreign substances that are able to penetrate into such sensitive areas are considered to be particularly exposed to product liability."
The lack of a cohesive regulatory environment is a key issue for the insurance industry, says Hett. She argues that an internationally valid standardisation of nanotechnological substances and materials and a uniform nomenclature are needed. The only way that the risk assessments of different institutions or countries can be compared is if the various classes of substance are precisely defined.
"Without a uniform 'language', neither regulative measures nor underwriting formulations [wordings] are possible. Without standardisation, even the labelling of products becomes an extremely difficult undertaking," says Hett.
But the pressure is on the government to address the insurance industry's concerns. In July the leading academics from the Royal Society and Royal Academy of Engineering published a report calling for the increased research into possible adverse health and environmental impacts of nanotechnology. The report also recommended an EU-wide review of the current regulatory regime.
The UK government, which commissioned the work, has said it will respond to the paper by the end of the year.
Nanontechnology is still in its infancy. It has the potential to bring many benefits to many areas of research and industry, but there are significant risk issues that the insurance industry must understand if it is to support the development of this technology.