Continuing our series on emerging risks, Mark Hynes assesses the impact of smoking-related and contagious diseases, uninsured driving, children in health and fitness clubs, land contamination and EU expansion

Environmental tobacco smoke (passive smoking)The debate continues about the possible adverse effects of environmental tobacco smoke (ETS) on non-smokers. There is broad acceptance that ETS exposure leads to ill health. But the real question that remains unanswered is the actual level of risk from "real world exposures".The government is concerned about the high costs to both society and the NHS that it believes are associated with smoking-related disease. It is, however, also a major beneficiary of tax revenue from sales of cigarettes and tobacco and is consequently faced with a difficult choice. The subject is unlikely to be a major vote winner and may even cost votes among smokers. In 2003 a group of senior medical figures wrote publicly to the national press seeking stronger action. And in early 2004 the anti-smoking pressure group ASH wrote to major businesses in the hospitality sector expressing the view that the date of knowledge for employers' liability (EL) claims had been established. It said that the letter would be kept "on file" as positive proof that the employer had evidence and knowledge.

Potential Impact: While there have been cases involving smokers taking action against tobacco firms and cigarette manufacturers, to date there have been very few cases based on ETS effects.More widespread smoking bans could limit or reduce the risk of claims alleging smoking-related disease from employees. Banning smoking may also potentially limit the risk exposure for the property sector by reducing the number of fires originating from smoking material. The major impact would be on the hospitality and leisure sectors - increased expense can be anticipated to ensure that businesses adequately deal with this issue.Realisation rating: 6/10

EU expansionIn May 2004 the EU expanded from its current 15 states to include 10 former Eastern Bloc countries. This increased the EU population by 20% or an additional 74 million people. According to a study by Deutsche Bank, it will take Slovenia, the most developed country, up to a decade to catch up with average EU earnings while Poland, the largest country to join, could take up to 40 years.

Potential impact: There are already significant numbers of migrant workers in the UK who do not speak English as a first language in sectors such as construction, leisure and hospitality. A further influx may increase the risk of workplace accidents and associated claims. It is telling that the HSE has recently sought funding to translate its health and safety literature for the construction sector into eight languages, including Czech and Polish. But perhaps the area most affected by the expansion is motor insurance. As holidays in Eastern Europe become increasingly popular, more drivers will take to foreign roads. To meet national levels of cover, insurers will need to look at new ways of meeting the EU motor Directives which now stipulate a minimum level of cover within these countries. If an accident occurs in Latvia, for example, it may prove more complex and time-consuming to ensure high quality of repairs. This may be further complicated by issues with local languages. Insurers may also have to pay customs duty on write-offs returned to the UK.Realisation rating: 4/10

Fitness clubs and childrenThere is a growing trend for young children (some as young as eight or nine) to join fitness centres where they regularly exercise with weights, rowing machines and exercise bikes.The latest government broadside about rising levels of obesity among the young and the need to take more exercise may increase the number of children taking regular exercise.

Potential Impact The 'pro' camp - comprising mainly of parents who want to stop their children becoming couch potatoes - see this as a sound and worthwhile activity. The 'anti' camp, however, is concerned about possible adverse effects on children. Muscle bulk cannot be gained until a child has passed puberty and there are also concerns that, rather than injury, the real risk might be one of damage to the "growth plates" in the long bones of the arms and legs, leading to developmental problems later in life. Could this represent the next long-tail liability issue? Might we expect some claims from children who have been through this experience and then believe that they have not realised their potential later in life - when they reach the age of majority for example? The numbers at present are small, limited no doubt by the fact that membership costs are high, on average £30 per month. But this might be a double-edged issue in that the children undertaking this type of activity are almost certainly from better-off families who might be expected to have a greater propensity to take legal action.Realisation rating: 3/10

Greenaway reviewWith an estimated one in twenty motorists driving without insurance at any one time, uninsured driving costs the industry an estimated £500,000 a year. The government has commissioned an independent review into the problem, with results due out soon.

Potential Impact:While there has been some support for insurance windscreen discs, latest reports indicate that the Greenaway review will back the ABI's proposals. The outcome will be that the UK looks likely to continue to insure the driver rather than the car, but more use will be made of the motor insurers' database to track offenders. The review could therefore turn out to be good news for the insurance industry. A much tougher enforcement process using the DVLA and law enforcement agencies looks set to reduce uninsured driving. While the Motor Insurers Bureau levy will help control premiums for the whole market.Realisation rating: 8/10

Infectious/contagious diseasesNew diseases such as the recent SARS epidemic can have a profound impact on modern society. SARS grew from a problem in an isolated area of China to become an issue of global importance.In the Western world, developments in the medical field have virtually eradicated the majority of such diseases, or at least reduced incidence to extremely low levels. However, changes in society are starting to reverse this advantage. The advent of cheap long-haul travel means that people are visiting parts of the world where diseases that are rare or unheard of in the UK may be commonplace.

Potential Impact: Those contemplating foreign travel need to assess the risks and take appropriate precautions. This applies as much to those undertaking business travel as to holidaymakers. Governments also need to consider the possibility of the appearance of diseases that could have a significant effect on the economy. Contingency plans need to be in place for dealing with the potential impact of diseases such as SARS or Asian flu. Realisation rating: 3/10

Land development (brownfield)The government is increasingly focusing on regeneration in deprived areas, such as inner cities and in particular brownfield sites, to meet its targets for development without excessive encroachment on green belt areas. In the South East, it intends to meet 60% of the urgent need for new housing using brownfield sites.

Potential Impact:Developing property on an industrial brownfield site, such as a tannery or a gasworks, brings with it obvious risks from potentially harmful residues and ground contamination. While commercial developers can control any residual toxicity by putting a concrete cap over the area, housing developers have to neutralise harmful substances or strip the soil completely. As this is not an exact science, there is always a risk that the complex technology may not work. Realisation rating: 5/10(NB: Realisation ratings are defined as the likelihood of the risk occurring and its potential impact on the insurance industry.)

  • Mark Hynes is head of casualty at Norwich Union