Nanotechnology Now - Press Release: INSCX exchange report titled: “Examining the case for Insurance in Engineered Nanomaterials” circulated to members of Lloyds of London

Home > Press > INSCX exchange report titled: “Examining the case for Insurance in Engineered Nanomaterials” circulated to members of Lloyds of London

Abstract:
It is reported the Emerging Risks Special Interests Group of Lloyds of London circulated to members of the insurance syndicate a report examining the case for insurance in nanomaterials presented for submission to the insurance syndicate by the Integrated Nano-Science & Commodity Exchange (INSCX exchange). The report titled; "Examining the case for Insurance in Nanomaterials" was produced by the Economic research unit of INSCX exchange during October/November 2010.

INSCX exchange report titled: “Examining the case for Insurance in Engineered Nanomaterials” circulated to members of Lloyds of London

London | Posted on December 23rd, 2010

In a foreword describing the report provided courtesy of Professor Jeremy Ramsden, Chair of Nanotechnology at Cranfield University, Professor Ramsden commented:

"This report fulfils a most valuable role in sensitizing the insurance community to some aspects of nanotechnology that have hitherto been largely confined to the realm of the technical expert. If nanotechnology is to be advantageously exploited for the benefit of humanity, a comprehensive approach involving all stakeholders is very necessary, and the first step in developing such an approach is effective dialogue between the different groups involved. This report is an excellent example of how such dialogue can be initiated."

Continuing Professor Ramsden added suggesting the formal launch of INSCX exchange should be regarded collectively by insurers and stakeholders in nanotechnology as:

"a milestone that provides an indispensable framework for enabling effective commercialization, including issues such as standardization and insurance."

Report Summary

The INSCX report stands as a frank, open assessment of possibility in nanomaterials pointing equally to its undoubted potential tempered with a rationale assessment of its limitations. The report remained highly critical of any attempt to introduce a profit motive to the issue of Health & Safety in nanomaterials suggesting cost-effective and practical solutions could be delivered to increase EHS standards across the industry in a manner that did not impose financial burdens the nanomaterials industry simply could not meet.

Equally criticism is reserved for elements attempting to pigeon-hole nanotechnology of late into existing economic sectors and the marketing of the field on the basis of novel as opposed to its substantive potentials. These are held as serving only to undervalue the multi-disciplinary nature of nanotechnology while limiting appreciation of its true socio-economic worth.

A spokesperson for INSCX exchange added the following comments:

Knowledge: Global insurers are very much aware of nanotechnology and understand to a considerable degree the implications held by the field. Lloyds of London we regard as do many others in nanoscience, as among the more proactive in assessing our industry, displaying a patience of longstanding deserving much wider recognition.

Importance: Insurance remains a fundamental cornerstone of the global economic system. To obtain insurers backing all stakeholders in nanotechnology need to appreciate our responses to this industry's questions must be delivered with clarity and cohesion as opposed to appeal to either the novel or futurism. Insurers require answers to what are for them in addition to capital investors and society in general, no more than logical, rationale questions. It remains in all our interests to work collectively particularly at the commercial end to provide these answers.

Record to Date: The facts of our collective industry response to date point to a reality where the nanotechnology industry has provided insurers with very little reason beyond an appeal to potential as a basis upon which to consider indemnification in the first place. Our collective response to various voluntary reporting initiatives promoted by various regulation agencies in recent years was simply shocking to cornerstones of the global economy such as the global insurance and capital markets who, despite being self-regulated by and large, take response obligations to official regulators very seriously indeed.

This view is held regardless of any opinion as to the extent of skills-base knowledge held by such agencies right or wrong as such opinions may be. Nanotechnology we all must agree is playing the role of salesperson in this instance to the insurer, not the other way around. The suggestions cited in the report now show our industry how it can move quickly to correct the imbalance. However, let us stress that basing our responses to the insurance industry solely on continued appeal to potential in the absence facts and evidence of real movement toward industry self-discipline at the commercial front-end risks losing the opportunity to secure indemnification. The choice is therefore for individual stakeholders in nanotechnology to make now, fully conscious we hope of the fact that without insurance our industry will struggle to emerge to anyone's benefit and certainly no commercial benefit."

Practical regulation: A series of effective and practical measures to be considered to balance societal and commercial interests are suggested going in the report going forward. In a clear message to the nanomaterials community the report's authors suggest nanomaterials suppliers and downstream users themselves hold the sole obligation to make the industry insurable in the first instance through adopting, and if necessary enforcing, codes of practice on industry participants themselves. Continued insularity and fragmentation at the commercial front-end are held as standing to thwart as opposed to further commercial progressions. Arguing the industry should be supported in its effort to self-regulate, the report also urges official regulators to open up to interact directly with industry participants to determine practical regulatory frameworks essential to effective but compliant commercialisation.

"The benefits of nanotechnology can far outweigh risk provided an informed clarity is sought from within the nanotechnology community itself as opposed to elements seeking short-term gain by effectively "jumping on the bandwagon" as it were. However, like any other industry, nanotechnology is afforded a right to campaign for the introduction of practical as opposed to punitive measures to regulate."

Solutions for Insurers: Insurers are directed to avail of established state-sponsored networks in nanotechnology and to use exchange mechanisms introduced to enable cut-off variables to be identified. The report also extends the definition of Risk in the context of insurance to include consideration of economic and financial risk pertaining to existing capital allocations, commodity dependent nations, elements likely to be affected as nanotechnology gains further economic traction. Crucially INSCX exchange identify synergies where solutions can be found to balance and structure society and commerce to integrate nanotechnology as opposed to fear its progress using the check and balance mechanisms of the open market supported by official regulation. "The checks and balances introduced by use of the open and transparent market have long been used by the commercial world to manage the transition of technology and to check any tendency to excess."

Formal Measures: Measures introduced by INSCX to assist global Upstream/Downstream users of nanomaterials acquire the benchmark Environment, Health and Safety Nanomaterials (SHE) standard are outlined as are exchange measures to tackle the issues of reporting and traceability from source throughout the supply-chain to end product. Insurers are encouraged to use these mechanisms not only as essential tools to assist the risk/reward evaluations part and parcel of underwriting assessment, but also as a basis to attribute a growing sense of corporate responsibility to the nanomaterials commercial community in general.

Industry Confidence: Nanomaterials suppliers and industry stakeholders are applauded and encouraged to continue efforts to unlock the potential of nanoscience while being invited to welcome as opposed to reject calls for wider regulations going forward provided such regulations permit a continued pursuit of compliant commercial effort. Corporate responsibility is described as serving a self-preservation interest for nanotechnology industry participants given risk of long-tail litigations. The report suggests that if adherence to a wider appreciation of corporate responsibility is enacted more vigorously within the industry now, the collective effort could only act by proxy to strengthen a safeguarding of societal interests.

Going Forward: Stakeholders are urged to have the confidence to face criticism head on, pointing up that nanotechnology held within its remit not only the prospect of societal benefit, but also a lifeline of opportunity to a stagnant global investment market post the financial crisis if properly stood on a commercial footing dealing with current real-world scenarios. An exchange spokesperson concluded adding:

"The nanotechnology community has a great deal to feel confident about and will develop confidence further. Global insurers stand ready to lend support, as do capital investors. Right now though the onus is on us in nanotechnology to meet the insurance and capital market industries half-way, to open dialogue so we can each understand the other. I suppose all we in nanotechnology lack is a little confidence and a wider appreciation of the essential cut and thrust of the world of commerce."

The reports authors conclude by applauding the effort of the Emerging Risks Team at Lloyds of London to revisit on from the formative 2007 report on Nanotechnology compiled by the insurance market.

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About INSCX Exchange
Integrated Nano-Science & Commodity Exchange (INSCX exchange) is a formal commodity exchange trading platform devoted to the structured physical trade of a wide range of Thematic Class Materials (TCMs) including nanomaterials, advanced materials, nano-enabled commodities/composites and more traditional commodities such as metals, grains, products and oils. All physical-delivery material contracts listed on the exchange are sourced (SHE) accredited, compliant and supplied independently inspected to commercial standards. Commodities listed for trade by us range from basic raw nanomaterials (NMs) such as carbons, metal oxides, specialty chemical solids, traditional commodities and high-end, processed goods such as photonics and programmable matter. The exchange is based in the UK operating live trading access within Europe and North America with full global rollout to be made available by 2011. INSCX aims to be the global focal point of emerging trade in nanomaterials, a trade which will be crucial to continuing world prosperity in the 21st century. The deliverable of INSCX is an electronic/voice-brokered commodity trading platform enabling price discovery, trade integrity and conformity to agreed material standards, while providing supports for suppliers and purchasers to enhance the commercial usefulness of nanomaterials. The exchange stands as the worlds only source of benchmark cash and forward contracts in alternative commodities supplied (SHE) accredited and independently inspected covering all eleven Thematic Classes available on any exchange.

Lloyds of London Emerging Risks Special interests Group
The special interests group brings together Lloyd's market representatives to discuss and feedback on emerging risks that could affect Lloyd's on a range of different timescales. The group is available to Lloyd's Managing Agents only. The special interests group was formed in May 2007 to act as a bridge between the Lloyd's Market and Lloyd's Emerging Risks team to identify key emerging risks that are of current and potentially future interest to the market. Members of the special interests group consist of Lloyd's Emerging Risks team, Franchise Performance, Class of Business and a mixture of underwriters, analysts and modellers covering many classes of business including, marine, livestock, property and energy. Emerging risk is cited by Lloyds as; "an issue that is perceived to be potentially significant but which may not be fully understood or allowed for in insurance terms and conditions, pricing, reserving or capital setting.

www.lloyds.com/The-Market/Tools-and-Resources/Research/Exposure-Management/Emerging-risks/Emerging-risks-special-interests-group

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