Cyber attacks, nanotechnology, 3D printing, and natural gas drilling aren’t necessarily on the minds of your typical property/casualty mutual insurer. But Charlie Kingdollar said that these and many other emerging risks must be part of their underwriting discussions.
Kingdollar, a vice president at General Reinsurance Corp. in Stamford, specializes in property/casualty emerging issues. He urged a packed room of mutual insurance industry professionals to place emerging risks high on their lists of client considerations, even though many may very well be traditional commercial and personal property owners.
“Are we asking the right questions?” Kingdollar wondered to his audience.
The session, held Sept. 23 at the National Association of Mutual Insurance Companies’ annual meeting outside of Washington D.C., covered a wide range of emerging risks. Kingdollar said that Gen Re is tracking more than 160 right now. All could leave insurers’ clients liable in more ways than they initially thought, he said.
Here are some of the discussion highlights:
Cyber attacks. Kingdollar stressed that this is much different than data breaches, hitting areas including malware and hacking that could cause physical damage, third-party injuries and property damage. These issues could be the result of terrorism, tech-savvy teens or disgruntled employees. Considering that technology is a vital part of home and work in an age of automation, Kingdollar said that insurers should factor this element into their daily underwriting queries.
“Cyber attacks are real,” he said. “Any company that has an automated food production line or automated production line” is vulnerable, he said, because the technology is vulnerable to malware, and “millions of types of malware are released annually.”
Hackers can also be a major point of concern because they may have an issue with a given business such as an oil or gas company, and hack into their drilling platforms to cause damage “just because they can.”
Nanotechnology. This becomes a liability because shrinking metals into sizes small enough to inhale can change their properties. The end result can create something combustible that wasn’t, add toxicity or bring other new safety issues to the equation, Kingdollar said. Liability concerns for smaller P/C insurers can lay with the fact that most nanotechnology companies are small and take space in storefronts. Whether or not nanotechnology debris can cause workers, or, employees at neighboring businesses health damage remains a going concern, he said.
As well, Kingdollar noted that products from food to facial creams – many made internationally – have nanomaterials added. If customers sue alleging health damages, the distributors and store owners that carry those products in the U.S. could be liable, he said.
“Nanotech will affect a lot of risk,” Kingdollar said.
3D Printing. These are machines that print everything from resins to plastics, metals, ceramics, concrete and more. Kingdollar said this will affect insurers on both the commercial and personal property/casualty sides. If a homeowner uses a 3D printer to create a part for a neighbor’s car and then the part fails leading to an accident, the person who made the part could be sued. Kingdollar noted that this could leave a liability gap because “homeowners’ personal umbrella policy language was not drafted with … homeowners’ manufacturing in mind.”
A commercial 3D printing shop could produce, on contract, everything from tools to auto parts or guns. What if someone was injured by products produced in a 3D shop, Kingdollar wondered.
Kingdollar asked : “How do we underwrite a risk that can be making anything at any time – widgets, toys next, then guns or auto parts. Clearly, we need to change the way we are looking at some of these things.”
The Internet. Kingdollar pointed out that electronic communications from emails to text messages carry the potential for “defamation, disparagement, and the violation of the right to privacy.” And many lawsuits end up hitting individuals – potential personal clients or their children.
“We know of about 50 or so verdicts for defamation for comments posted somewhere on the web [involving] individuals being sued,” Kingdollar said. “Not businesses, but individuals versus individuals, or a business suing an individual. ”
Kingdollar recalled a client – a teen girl of one of his company’s insureds who had posted nine negative comments online in three weeks about a particular teacher. The teacher found out and sued for defamation. The insured defendant went to court, and while the judge threw out a number of the posts, both parties ended up settling. But there are other Internet risks involving the sheer volume of messages or texts or posts that one person can make, he said.
Kingdollar also noted, for example, a recent cyber bullying issue where a teenage girl committed suicide. The family sued the school but also the families of seven bullies.
Natural gas drilling. Kingdollar pointed out that while the mutual insurers in the audience don’t write for the drillers themselves, they do write for ancillary contractors, and even property owners who lease the land for drilling.
“Can [the property owner] be held liable for the activities of the land lessee? The answer is ‘maybe,'” Kingdollar said.