From the EMR Policy Institute:
Top Liability Expert A. M. Best Identifies Radofrequency Radiation
With Emerging Technologies That “Pose Significant Risks with Possible Long-Tail Losses”
Radiofrequency Radiation heads A.M. Best list that includes Cyber Risk, Fracking, and Nanotechnology.
Why take note of A.M. Best’s opinion? From its website www.ambest.com :
The largest and longest-established company devoted to issuing in-depth reports and financial strength ratings about insurance organizations.
Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the insurance industry. Policyholders refer to Best’s ratings and analysis as a means of assessing the financial strength and creditworthiness of risk-bearing entities and investment vehicles.
From A.M. Best’s February 14, 2013 Best’s Briefing –
The insurance industry faces a constantly escalating level of exposure from rapidly developing technologies with risks that are not well understood. In many situations, the science associated with understanding these new risks is in the early stages of development. A.M. Best believes that it is critical for insurers to maintain vigilant oversight of emerging technologies as a critical component of their enterprise risk management system. Effective enterprise risk management encompasses identifying, evaluating and addressing risks that could threaten the earnings or viability of an insurer. This includes a prospective look at the underwriting exposures so that changes to policy language or underwriting criteria can properly manage losses for these new risks. An exposure which may present only insignificant insured losses at present, may bring future unprecedented losses . . .
. . . Insurers need to monitor the manner in which emerging technologies are, or are likely to be, deployed; the risks associated with their use; their residual or unintended impacts; and the manner in which the insurance policies may be called upon to cover losses.
Emerging Technology-Based Risks
RF (Radio Frequency) Radiation Risk – Today there are more than 600,000 cell sites in the United States and that number is expected to grow with the demand for faster, more reliable wireless devices. The risks associated with long-term use of cell phones, although much studied over the past 10 years, remain unclear. Dangers to the estimated 250,000 workers per year who come in close contact with cell phone antennas, which act at close range essentially as open microwave ovens can include eye damage, sterility and cognitive impairments. While workers of cellular companies are well trained on the potential dangers, other workers exposed to the antennas are often unaware of the health risks. The continued exponential growth of cellular towers will significantly increase exposure to these workers and others coming into close contact with high-energy cell phone antenna radiation.
Cyber Risk – Significant data breaches have become common (e.g., Citigroup, the International Monetary Fund, JP Morgan Chase & Co., Sony Online Entertainment, Hilton Worldwide, Marriott International Inc., Verizon, and Heartland Payment Systems). These can involve, for example, loss of sensitive financial information, personal data, and proprietary secrets. Identity theft alone is estimated to cost consumer and companies roughly $5 billion and $50 billion, respectively, each year. A 2009 study found that lost data cost U.S. companies in excess of $200 per lost customer file. In a 2011 study conducted among large U.S. companies more than 80% of information technology executives said that they had detected one or more recent attacks. Such exposures continue to evolve as companies are increasingly storing sensitive and confidential information with cloud vendors – a vendor that provides other companies with an infrastructure on which to store data or run applications – exposing data to new types of breaches.
Fracking Risk – Over the past 10 years horizontal fracturing (“fracking’) has become a big business and a highly contentious issue. The process involves pumping a pressurized fluid into a rock layer, which causes fracturing of the rock and release of petroleum, natural gas or other substances for extraction. The potential benefits are enormous; however, there are significant risks, including potential release of radioactive substances, radon (a known carcinogen) in the natural gas going into homes and potential chemical contamination of drinking water. The U.S. Environmental Protection Agency has determined that fracking was the likely source of ground water contamination in at least 36 cases. There are a variety of other concerns including the potential for exposed workers to develop silicosis and that the process may lead to earthquakes.
Nanotechnology Risk – A wide variety if consumer and industry products are increasingly constructed a the molecular level, using materials from 1 to 100 nanometers in length (a nanometer is one billionth of a meter). Nanotechnology is employed in an array of products, including medicines and medical devices, glass, coatings, construction products, fire protection materials, vehicles, foods, textiles, cosmetics, optics and sports equipment. Nano-sized particles, however, act differently than materials built at normal scale, and existing chemical risk assessments are not suited for exposures arising from nanoparticles. Considerable concern has arisen that some nanoparticles may be toxic. With the exception of airborne nanoparticles entering the lungs, understanding of the effects of nanoparticles on the human body, including accumulation, metabolism and organ-specific toxicity is extremely limited. Concerns involve both the potential of immediate harms as well as harmful effects appearing after long latency periods. Of the technology risks now emerging, nanotechnology product exposures may be the most similar to asbestos. While it remains unclear whether nanoparticles can lead to asbestos-like losses, insurers need to carefully monitor developments of this emerging technology.
Insurers must evaluate constantly evolving technology exposures with the knowledge that existing scientific/technical understanding is often incomplete. A.M. Best will review companies’ understanding of their exposure to emerging risk, and their approaches to mitigating the risks within the framework of their enterprise risk management programs.