Nanotechnology and Insurance

by nickk on July 31, 2014

There are many fields of emerging risk in technology but few are as fascinating as nanotechnology. Nanotechnology involves materials which are less than 1 billionth of a meter long. A human hair is about 800 times thicker than the average nanomaterial. It’s not too long ago that nanotechnology was really the stuff of science fiction. Yet, in the last decade more than 1,000 products have come to market using nanotechnology. That means that there are new opportunities for insurers and new risks.

Insurance and Nanotechnology – The Opportunities

Nanotechnology offers opportunity for risk reduction in many industries. A nanotech sensor could be used in construction to monitor the stress on materials; this would enable accurate detection of the collapse of a structure – making insuring that structure less of a risky proposition. The risks of having to deal with death or injury would be significantly reduced.

Then there are the medical applications of nanotech with the potential to cheaply and easily treat a wide range of conditions. Health insurers will be pleased to think about the impact on claims of these solutions.

In the clothing industry, nanotech can be used to increase flame retardance, for example and that means safer working practices in many industries.

Insurance and Nanotechnology – The New Risks

There are substantial new risks involved in nanotechnology and the number 1 risk is not the rise of nanotechnology to consume the earth, as speculative science-fiction would have it, but rather the risks of inhalation damage.

Nanoparticles are tiny. They’re going to be very easy to inhale. This applies nearly equally to those involved in their manufacture and to those exposed to them in their day-to-day use. Of course, there’s some testing of nanomaterials prior to their release into the commercial market but who’s to say how long testing should last or what it should consist of? Unfortunately, there’s no single body regulating nanotechnology nor is there a universal agreement on what constitutes “inhalation risk”.

Insurers are going to need to exercise extreme caution here; imagine the consequences to the bottom line if a nanotech product were to become, as has been theorized; “the next asbestos”. Nanotechnology in the food chain in fact grows this risk exponentially; asbestos wasn’t anywhere near as prevalent as food is.

It’s possible that nanotech may have major environmental impacts. Toxicology and environmental reactions are poorly understood for the new technology.

There are also potentially unforeseen effects to take into account; nanotechnology is new – we may not even have conceived of some of the problems it may create in the future.

Specialist Insurance for Nanotechnology?

Nanotech almost certainly requires specialist insurance. Yet, most insurers are completely unprepared to deliver this product. General risk policies may prove to be deeply inadequate to the task. The risks faced may be far greater than have been fully considered at this moment. We would expect this to change and quickly when the issue is considered more fully in the boardroom.

Insurance Nanotechnology


There’s no doubt that technology has the power to help the insurance industry. This week, we’re left wondering if a new development may hinder some insurers and boost the profiles of others. Traditionally insurers have been rated on their financial performance and perhaps their stockholders. These measurements are great if you want to invest in insurance; but not so great if you want to take out a policy. The question is; what should insurers be rated on from a consumer perspective?

Injured Money

There’s a chap called Dan Karr, in the United States, who found himself seriously injured when a car ploughed into his bicycle on his way to work. He then tried to claim on his insurance policy for the damage. He ended up facing $100,000 in medical bills as his insurer tried every trick in the book to try and evade paying out on his policy. Dan’s a powerful Silicon Valley executive; he had the resources to fight his insurer and he sued them and won. He even wrote a book about the issue.

It appears that Dan’s experiences had a major influence on his life because he is now forming a company called Injured Money. Injured Money proposes to be the first insurance ratings agency that looks at the consumer perspective.

What Should Insurers Be Rated on From a Consumer Perspective?

There’s probably only one thing an insured party wants from his/her insurer. That’s the ability to get paid when they need to make a claim. They aren’t interested in the weasel words of the small print of their policy (and if we’re honest – it’s unlikely that many people actually read that small print in the first place) they want to know that they’re going to get paid out.

They want that process to be as painless as possible too. They don’t want to have to sue their insurer or complain to a Financial Ombudsman they’re dealing with trauma and they don’t want insurers adding to that.

That’s where Injured Money intends to make life easier for the consumer. They’re going to rate insurers on their claims payment ratios. A potential customer for motor insurance will be able to see that company A may be cheaper but they are also 3 times less likely to pay in the event of a claim than company B.

Early Days but Be Prepared

At the moment, Injured Money is in its infancy. It’s also only going to be happening in the United States (so European insurers can breathe easy) but given that it’s raised 75% of its Kickstarter funding requirements in just under 10 days (with 20 more to go) – it seems that Injured Money will be a reality. If it is a success; it’s likely that a similar service (or perhaps the same service) will make an appearance in Europe very soon.

If that data was then combined with insurance aggregator data; there’s potential for an enormous level of disruption in the insurance market. However, it’s clear that customers may well give this idea a thumbs up.

Insurance Thumbs Up



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