Lexington Announces Plan To Underwrite Nanotech Risks
Depending on your point of view (and appetite for risk), nanotechnology is the plastics of the 21st Century or the second coming of asbestos.
Uncertainty concerning the future role of nanotechnology in industry as well as the potential health and toxicological risks that it presents has created a quandary for insurers. On the one hand, pharmaceutical manufacturers and other insureds that are likely to apply nano technologies in the future will want to assure themselves of the availability of coverage for product liability claims and related exposures that may result from the use and application of nano technologies. On the other hand, the appeal of marketing a coverage applicable to this risk is substantially off-set by the horrific exposure that insurers have suffered over the last several decades due to the unexpected liabilities arising from environmental and mass tort exposures such as silica and asbestos.
In 2008, ISO promulgated a Nanotubes and Nanotechnology Endorsement Exclusion (Form CW 33 69 06 08). The exclusion bars coverage for bodily injury and property damage or personal and advertising injury “related to the actual, alleged or threatened presence of or exposure to ‘nanotubes’ or ‘nanotechnology’ in any form or to harmful substances emanating from ‘nanotubes’ or ‘nanotechnology.’” “Nanotubes” is defined as meaning “hollow cylinders of carbon atoms or carbon fibers or any time or form of ‘nanotechnology’ which contain remarkable strength and electrical properties used in any products, goods or material.” “Nanotechnology” is defined as meaning “engineering at a molecular or atomic level.”
As it its wont, the former AIG is going in the opposite direction and is now marketing an insurance product specifically designed to cover nanotech exposures. In a press release issued this week, Lexington Insurance, a Chartis company, announced that is introducing LexNanoShieldSM, which Lexington described as “an integrated insurance product and array of risk management services designed for firms whose principal business is manufacturing nanoparticles or nanomaterials, or using them in their processes.”
The policy includes various “claims made” coverages, including general liability, product liability, product pollution legal liability and product recall liability exposures. Additionally, first party coverage is provided if a product containing nanoparticles or nanomaterials is recalled from the market for safety reasons. Lexington also claims that LexNanoShield provides insureds with legal, technical and loss control consulting services to help develop, implement and assess nanotechnology-specific risk management programs.
Lexington and Chartis have often taken the lead in the past in writing new and uncertain risks. It will be interesting to see if other insurers follow Lexington’s lead or continue on the path of distancing themselves from nanotech until its risks and benefits are better known.
