Brave Small World
As technology continues to shrink,
insurance concerns grow exponentially.
Scott Sinder and Anna Gergely
The world is shrinking, and nanotechnology may become the
unseen revolution that proves the point once and for all.
Companies such as BASF, Bayer, DaimlerChrysler,
Hewlett-Packard, IBM and L’Oréal are among the
pioneers in developing nanomaterials and products that contain
them. Today, many other established companies and thousands of
start-ups take advantage of the benefits offered by
nanomaterials in their products. Nonomaterials are already
heavily embedded in healthcare, personal care products and the
energy and electronics sectors. And they have significant
potential to revolutionalize the aerospace, wind and automotive
industries. So what exactly is nanotechnology, and why should
For starters, consider that one nanometer (nm) is a
billionth of a meter. For a better sense of the scale, consider
that a nanoparticle is to a football what a football is to the
At nanoscale, the physiochemical properties of well known
and commonly used materials may change, leading to unique new
properties. The same material may have different properties at
different nanoscales, further extending the scope of potential
Properties of nanomaterials (including, in all likelihood,
those yet to be discovered) will open doors to an endless array
of new applications. Nanotechnologies will influence the way we
produce and use energy, transform raw materials and design,
manufacture and consume end products.
A 2011 Lucintel study estimates that the nanomaterials
market will reach $6.1 billion by 2016. Lux Research says the
nanotechnology industry (including nanomaterials and
nano-enabled products) is expected to generate $2.5 trillion in
Despite this phenomenal growth, knowledge concerning the
health and safety impact of nanomaterials is in its infancy.
Many research projects have been commissioned in recent years
to assess the potential hazards and risks associated with the
use of nanomaterials. However, the different standards and
methodologies used have not always led to comparable results.
The lack of available data to identify and measure such risks
over time adds to the challenge. For example, the long-term
risks related to the inhalation or absorption of nanomaterials
are particularly difficult to measure. Once inhaled, substances
at nanoscale could penetrate lung membranes and reach blood
vessels and from there travel to organs such as the brain or
heart. Traditional studies may prove inadequate to measure such
To manage the risks related to the use of nanomaterials,
legislators in the European Union have introduced some
sector-specific requirements. These include the obligation to
use only authorized nanomaterials and to notify authorities
about their use. Such requirements are generally introduced
where health concerns are traditionally higher, such as when
materials come in contact with food or cosmetics.
The European Commission, the executive body of the European
Union, published a definition of nanomaterials in
October—an important step toward clarifying their
regulatory status (at least in the EU). The Commission
recommendation defines “nanomaterial” as anything
that is “a natural, incidental or manufactured material
containing particles, in an unbound state or as an aggregate or
as an agglomerate and where, for 50% or more of the particles
in the number size distribution, one or more external
dimensions is in the size range 1 nm-100 nm.” Although it
is not binding and does not have worldwide application, the
Commission’s definition is a noteworthy first step and
could have a major impact on developing nanotechnology
regulation around the world.
You and your clients face the challenge of assessing the
risks associated with nanotechnologies at a moment when the
understanding of their potential risks is incomplete.
Nanomaterials have attracted significant attention from
policymakers, focusing on potential health risks to workers and
consumers, as well as environmental risks.
Some of you and your carrier partners may still consider
nanotechnologies as a future challenge. In all probability,
many of your clients already incorporate nanotechnologies into
their products or their production processes (or are
considering doing so). Your firm needs to understand these
developments and their potential impact on clients’ risk
management and insurance needs.
Nanotechnology insurance solutions are still being
developed. While some insurers appear to be waiting, others are
launching specific liability products for nanotechnology
producers. The presence of nanotechnologies in a client’s
products and production processes forces insurers to reassess
the liability risks in their current policies and to review
their own coverage under existing reinsurance agreements.
Insurance brokers should play a significant role in the
development of the nanotechnology insurance market. You will
have a significant competitive advantage if you have (or
develop) the knowledge and ability to assess nanotechnology
risks and their impact on specific industry sectors. The world
is, indeed, getting smaller. Can your firm handle the heavy
burden that a smaller world will require?
Sinder is CIAB’s general counsel.
Gergely is director of Steptoe’s Environmental Health
Sciences Group in its Brussels office. email@example.com