Nanotechnology refers to a wide range of substances manufactured at an atomic or molecular level. Because of the extremely small size of such materials, they have unique properties that, in many cases, are not yet understood. While nanotechnology is exciting and presents many possibilities for growth as well as advancement, there are also many undefined and unsubstantiated risks associated with it.
Risks facing Nanotechnology companies
Being proactive in this situation is difficult. Nanotechnology is very broad and affects many disciplines, products and industries, so it is more challenging to assess than something like asbestos. Many manufacturers do not know if their products contain or are produced using nanotechnology. Plus, each nanoparticle could represent a different degree of risk. Despite uncertainty, companies need to be protected. If problems arise down the line, claimants could argue that the company knew there were potential risks but did nothing about them.
”The trade off of benefits against risks is reflected in increasing facilities investment and research funding in order to understand the risk. The Swiss Re report39 distinguished between traditional insurance risks – which are evolutionary – and disruptive or revolutionary risks, as seems to be the case with nanotechnologies because of the lack of long-term data to support insurance provisions.
A comparison was offered with hazards from the asbestos industry, given the many similarities. Asbestos has been widely used for over a hundred years, and although isolated studies had shown that there was a potential risk and that the form and size of the fibres could cause mesothelioma, regulations and protective measures were only introduced after patients all over the world had fallen incurably ill. The true extent of the damage could not be foreseen even approximately in the absence of long term experience. Despite the early evidence of the danger of asbestos exposure, it took approximately one hundred years to introduce internationally accepted standards. The danger for the insurance industry is that exposure to nanoparticles represents a potential chronic, rather than an acute health hazard and that it might be some time before it manifests itself.
This is the real risk for insurers, and the comparison with asbestos should be seen in this light. The strategy for establishing occupation exposure limits is already well established. The proposed risk assessment procedures will help allay the fears expressed by the insurance industry as this will bridge the gap between unknown (and hence uninsurable) risk and known risk, which can be managed by the insurance industry.” *
* Mini Innovation and Growth Team – Nanotechnology: a UK Industry View
How to Protect Your Nanotechnology Company
There are several ways to protect your company. Consider requiring suppliers or even sub-suppliers, to disclose nanotechnology used in the production of what they provide your company. You will need to share this information with Business Insurance Service to ensure proper cover and to prevent claims of nondisclosure. Because of the vast scope of nanotechnology, several types of cover may be appropriate.
Business and Property Cover
Any business engaged in nanotechnology needs to have sufficient property, business interruption and public and employers’ liability cover in place. Workers involved in the research, development or production of nanoparticles are at risk for workplace injury or illness resulting from exposure. Which could lead to claims involving bodily injury, negligence due to unsafe work environment and inadequate worker protection, among others. Property damage claims could also result from accidents caused by the reactivity of nanoparticles.
Companies with environmental risks should also be covered under environment liability. Though not everything is known about nanoparticles, they may be released into the environment during production, storage, transport, product use or disposal and accidental releases into the environment could go undetected. The effects of nanoparticles on the environment and human health are unknown, which means it’s important for companies to carry liability cover to offset risks. It is important to discuss potential risks with your insurer to ensure that your liability policies cover claims associated with nanotechnology.
Products Liability, Intellectual Property, Professional Indemnity and D&O Claims
Due to the uncertainty what could potentially go wrong with products manufactured using nanotechnology and product liability claims could arise. In addition, consider products recall cover because such risks could cause massive product recalls. Intellectual property becomes a grey area regarding nanotechnology due to its unique nature.
Disputes could certainly arise in this arena and companies would want to be protected. In addition, to keep the company protected with the uncertain future of nanotechnology, professional indemnity cover as well as directors and officers (D&O) cover should also be part of a strategic insurance package.
The most important thing for employers to do regarding nanotechnology is stay informed about the ways nanotechnology is used in their own companies, be open with insurers regarding nanotechnology use and make sure to have appropriate covers in place to combat potential claims.
How Business Insurance Service can help
While the proper risk management practices can reduce certain exposures, no system is 100 per cent effective in ensuring an accident-free workplace. As a result, it’s all the more crucial to work with a qualified insurance broker to not only assess your exposures, but secure the appropriate cover as well. To learn more, contact Business Insurance Service today.
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