Role of Insurance for Innovative Technologies: Nanotechnology

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Lecture by Michael Bruch
This was discussed on November 27, 2012 at Università Bocconi, Milan, at a conference promoted by the Allianz Group, by Fondazione Giannino Bassetti and the prestigious Milan university itself. After a welcome greeting by the Rector of the University, Andrea Sironi, Michael Bruch, Head of Research & Development - Risk Consulting at Allianz Global Corporate and Specialty (AGCS) and risk expert at the Allianz Center for Technology (AZT), held a lecture on the role insurers can play in the development of innovative technologies such as nanotechnologies. http://www.fondazionebassetti.org/en/focus/2013/01/risk_and_responsibility_in_inn.html

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Role of Insurance for Innovative Technologies: Nanotechnology

  1. 1. Allianz Global Corporate & Specialty Role of Insurance for Innovative Technologies: Nanotechnology AGCS Risk Consulting / Head of R&D, Michael Bruch / Milano 27 November 2012© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 1
  2. 2. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook 2© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 2
  3. 3. AllianzAn IntroductionAllianz Group is one of the world’s leading insurers and financialservices providers Founded in 1890 in Berlin, Allianz companies now extend to over 70 countries with approximately 142,000 employees and 78 million customers Insurer financial strength rating of AA (‘Very Strong’) from S&P and A+ (‘Superior’) from A.M. Best International network of strong brands, with first-class products in the fields of: 1. property and casualty insurance 2. life and health insurance 3. asset management For more information visit www.allianz.com.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 3
  4. 4. Allianz SE Results 2011 In summary Revenues again surpass  Solid performance despite difficult environment 1 €100bn mark  Stable operating profit of €7.9bn, on target €1.8bn in NatCat claims paid  Revenues of €103.6bn, close to 2010’s record 2 or reserved for our customers (€106.5bn) Operating profit target  Net income of €2.8bn (2010: €5.2bn) impacted 3 achieved despite challenges by impairments from Greek sovereign bonds and financial sector investments Diversified business key to  P&C business: revenues increased to record 4 strength high of €44.8bn - profitability also maintained Excellent capital position with  L&H business remains on high level with €2.4bn operating profit 5 strong solvency ratio  Asset Management delivers excellent result  Strong capital position further improved: “These results show the true shareholders’ equity rose to €44.9bn, solvency strength of the Allianz business ratio increased to 179% as at Dec 31 st 2011 model.“  Allianz SE maintains its strong financial ratings Michael Diekmann, CEO of Allianz SE© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 4
  5. 5. Allianz Global Corporate & SpecialtyAn OverviewWe are one of the few specialist corporate insurers with a genuine global marketpresence who can provide “one carrier” insurance solutions across the wholespectrum of corporate and specialty risks. Product lines Diversified product portfolio Alternative Risk Transfer Aviation Wide range of complementary services, including specialist non-traditional risk transfer solutions provided by our subsidiary ART Energy Engineering / Construction Financial strength: €4.9 billion GWP (2011) Financial Lines Global Programs Global reach: integrated in the Allianz network of more than 150 countries worldwide Extensive international experience: manages Liability / Casualty Marine some 1,600 International Insurance Programs More than 3,400 dedicated employees Property Risk Consulting© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 5
  6. 6. Emerging risk definitions according toCRO ERI members  Full nature and effects are not yet known  May develop or already exist  Difficult to quantify and may have a large loss potential on society and industry  Represent potential business opportunities for the insurance industry as well  Often they are already present in an insurers existing portfolio.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 66
  7. 7. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 7
  8. 8. Examples of Emerging Risks….and their drivers Innovation  Electromagnetic fields Economy  Genetic modified organism  Power blackouts  Cyber risks  Endocrine disrupters  Nanotechnology  Obesity  Offshore Wind  Longevity  … Legal framework Society© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 8
  9. 9. © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 9
  10. 10. Risk Assessment - Opportunities and Risks of NanotechnologiesJoint Report with the International Future Program ofOECD in 2005Contents: What is nanotechnology? Markets for nanotechnologies Players Government programs Risks Opportunities and Risks for the AZ GroupPress conferences in London, München,Wien, Madrid© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 10
  11. 11. "Dosis facit venenum." (Paracelsus, 1538)© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 11
  12. 12. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 12
  13. 13. Sizes of various objects for comparisonSource: VDI TZ / Federal Ministry of Education and Research © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology 27 Copyright Allianz SE 13
  14. 14. New properties of engineered nanoparticles Quantum-mechanic Increased surface area Molecular recognition behaviour „New“ technical physics „New“ chemical processes „New“ bio-applications through changes in through changes in through combination with  Colour, transparency  Melting and boiling  Self-organisation  Hardness point  Repairability  Magnetism  Chemical reactivity  Adaptability  Electrical conductivity  Catalytic yield  Recognition© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 14
  15. 15. What is Nanotechnology?Nanotechnology is the understanding and control of matter atdimensions of roughly 1 to 100 nanometersSynthesis and Manipulation of matter inNano Scale Dimensions Nanoparticles (e.g. Carbon Black) Carbon nanotubes / fullerenes Fullerene Atomic Force Microscope ...Materials with tailor-made new physical, chemical andbiological properties. Sources: Universities of Reading, Carbon Nanotube© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE Nagoya 15
  16. 16. Natural sources of nanoparticles© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 16
  17. 17. Consumer Nano-products Source: http://www.nanotechproject.org/© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 17
  18. 18. Nanoproduct figures 2011 Number of products according to main categories ( ∑ = 1,393)Cross cutting applications (coatings) Appliances Goods for Children 6% 3% (washing machine, air cleaners) Electronics and Computers 2% 8% 4% Food & Beverage (e.g. dietary supplement) Home & Garden 15% (cleaning supplies) Automotive (tires, lacquers) 9% Health & Fitness 53% (sporting goods, clothing, cosmetics, sunscreens) Source: www.nanotechproject.org © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology 27 Copyright Allianz SE 18
  19. 19. Nanoproducts in the future© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 19
  20. 20. Ongoing industrial production of nanoparticles Pyrogenic oxides • Silica (1940´s) • Surface-treated silica (1960´s) • Alumina (1950´s) • Titania (1950´s) • Mixed metal oxides (1950‘s) • Zirconia (1990´s) • Zinc dioxide (2000´s)Source: Dechema / VCI Nanostructured materials are not new © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology 27 Copyright Allianz SE 20
  21. 21. Zinc oxide for UV-A protection How does it work?  Nanoscale ZnO absorbs and scatters UV- light Skin  High sun-protection factor  Good feeling  Protects against cancer and skin aging Wood and polymers  Long term UV-protection  Transparency  No leaching  Stable at elevated temperature SourceDechema / VCI  Increased outdoor lifetime of wood© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 21
  22. 22. Self-cleaning surfaces: Lotus effect Lotus leaf Microstructures of a lotus leaf with Technical realisation of water-repelling nanostructured the lotus effect wax crystals Beispiel: Facade paint Surface with lotus effect water dirt particles Source: FCI© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 22
  23. 23. Cancer therapy with nanobiotechnologicallymodified iron oxide nanoparticlesApplication principle: Nano-particles are absorbed specifically by the cancer cells Special iron oxide nano-particles are super- heated in cancer cells by an external magnetic field thereby killing the cancer cellsStatus quo since 2005 clinical trials for glioblastoms (malignant brain tumors) in 2011 this treatment has received an EU approval for therapy use Source: MagForce© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 23
  24. 24. Carbon Nanotubes Strongly investigated since the beginning of the 90’s Extraordinarily active field of research Properties: Applications:  6 times lighter than steel—but  Composite materials (metal, ceramic, 100 times stronger polymer matrix)  Compressive strength: 2 x  Field emission displays Kevlar  Tensile strength: 10 x steel  CNT-electronics  high electrical conductivity  Bio sensors© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 24
  25. 25. Nanotechnology in cars today… Color dependent on Anti-reflection coating viewing angle (dashboard instruments) Scratch-resistant paint Heat-reflecting and self- cleaning glazing Reduced wear and tear in the engine Scratch resistantcoating (plastic parts) Light-emitting diodes Dirt-repellent surfaces (LEDs) in the headlights Elektrochrome rear-view mirrors Carbon Black in tires for less (darken upon receiving an abrasion and better adhesion electrical signal) © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology 27 Copyright Allianz SE 25
  26. 26. …and tomorrow Scratches in the paintwork “heal`” by themselves with selforganizing nanoparticles Catalysts and nano membranes for Distributed solar cells using better fuel cells conformable photovoltaics High-brightness nano-enhanced polymer displays Carbon nanotube alloys for lighter, tougher framesCeramics with improved catalysts for reduced emissions Sensors monitoring e.g. road conditions, vehicle’s steering ability Lighter, tougher tires; nanoclays to improve tire gas barriers Polymer composite panels for greater stiffness and toughness Fast-charge batteries for hybrid cars © November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology 27 Copyright Allianz SE 26
  27. 27. Direct benefits for insurers from nanoproducts  Damage-resistant building materials – but loss patterns with new materials are unknown  Stronger or more adaptive materials to absorb crashes (e.g. automotive sector)  Wireless, nano-enabled sensors to report defects in structural components  Pollution cleanup and prevention  Nanoenabled medical therapies© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 27
  28. 28. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 28
  29. 29. The business opportunities from an insurer’s perspective  Growth sector for commercial and industrial insurance cover  Adequate insurance cover as an prerequisite for entrepreneurial activity especially for small- and medium-sized enterprises© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 29
  30. 30. However... Free nanoparticles - can travel deep into the lung and reach the alveoli - can induce inflammation and tissue damage - can pass the blood brain barrier - can reach the blood stream and are transported to various organs © David B Warheit, DuPont Haskell Laboratory - can enter the body over various pathways  A few manufactured nanomaterials have shown toxic properties  There is a correlation of the concentration of fine and ultrafine particles in ambient air with mortality rates found in epidemiological studies  We cannot exclude unintended long term effects on health and environment© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 30
  31. 31. …and the exposure of persons and the release ofnanoparticles into the environment will increase Contamination of the environment, buildings etc. from sudden and accidental releases Increasing number of work places affected Increasing deliberate applications in products (Medicine, Pharma, Cosmetics etc.) Unintended release of nanoparticles from products during their life cycle (use, destruction, incineration, disposal ...) Water droplet / „Lotus“-effect© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 31
  32. 32. Why is Nanotechnology an Emerging Risk for insurers (1)  Existing insurance covers include risks of nanotechnology.  The knowledge is incomplete in terms of emission sources and quantities, toxicology, ecotoxicology and environmental behaviour.  Reliable standardised methods of measurement and guidelines for testing are mostly missing.  Involvement of high number of companies from different industries incl. subsequent processing companies.  Multiple lines of business and multiple classes of insured could see claims Potential loss scenario resemble major product liability cases from the past.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 32
  33. 33. …why is Nanotechnology an Emerging Risk for insurers (2)  Regulatory uncertainties  Unclear definition and terminology  Ambiguity in risk perception - significant NGO activity and low consumer knowledge  No loss history available  Imbalance and lack of information  Identification, monitoring and controlling of those few particles and applications which may pose a health or environmental risk is difficult.=> Even under an optimistic scenario it will take several years until the “knowledge gaps” will be closed© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 33
  34. 34. Emerging Risk Update - NanotechnologyOccupational health risks1)2) More than 1,000 nanotechnology firms in US have fewer High Nano than 25 people. related Survey on occupational safety and health, University of occupational California: health risks for SMEs and - Only 46% of Nano firms have nano-specific environmental health and safety programs (EHS). secondary producers… - Nearly 30% of the companies that did require personal protection only required dust masks. - Confusion about the right best practice measures in terms of nano workplace safety. The larger the firm, the more likely it will have nano- specific EHS in place. 1) http://www.newhavenindependent.org/index.php/archives/entry/survey_shows_confusion_on_protecting_nano_workers 2) http://www.genre.com/sharedfile/pdf/InsuranceIssues201111-en.pdf© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 34
  35. 35. Emerging risk update - Nanotechnology EU- operational health and safety experts (OSHA) see nanoparticles as major concern on workers Increasing risk health. perception of http://osha.europa.eu/en/publications/reports/TE3008390ENC_chemical_risks/view Nanotech risks No pending claims known but legal advisers on the part of recommend to place nanoproducts into commerce regulatory before insurers are able to realise and quantify bodies, lawyers nanorisks. and research Due to toxicity concerns industry will face tougher institutes. product testing rules for nanoparticles in cosmetics as of 2013 (e.g. sunscreens). EU reforms will force food manufacturers (EU’s novel food regulation) to state and to label if products contain nanoparticles.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 35
  36. 36. Potential for major exposureFactor for consideration Manufacture Use End of lifeAbility to control exposure High Medium LowTime for impact Short or long Long Long Potential for exposure to nanomaterialsWho/what at risk for exposure Workers Consumers EnvironmentKey form of exposure Free particles Fixed particles Fixed particlesDegree of regulation High Medium LowIncentive for produce to invest in High High Mediumcountermeasures Tens to Thousands toNumber of individuals at risk Millions thousands millions Possible overOpportunity for exposure to large volumes Frequent Rare timeUnresolved questions Fewest More Most© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 36
  37. 37. Nanotechnology risk landscape  Many voluntary data-gathering systems but no Regulatory Risk  international nomenclature  practical guidelines© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 37
  38. 38. Nanotechnology risk landscape  Most of the products seems to be safe  Number of risk studies is Production Risk increasing but  no clear answers on safety profile of nanoparticles and Regulatory Risk nanoproducts  The more risk studies we see the higher the (un)certainty gets(?) – disputes among© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology Copyright Allianz SE experts can be 38 basis for the27 future claims
  39. 39. Nanotechnology risk landscape Highest impact on the overall risk, due to the lack of  qualified hazard and exposure data Perceptual Risk  strong legal framework  harmonised public risk communication (risk-benefit approach) Production Risk Regulatory Risk© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 39
  40. 40. Nanotechnology headlines Nanotechnology risks: The new asbestos?The safety risks of nanotechnology use by the food industry What is thecould make it “the we asbestos”…. influence of the perceptual risk Nanofibres could be as harmful as on nano- asbestos Experts have said that inhaling nanofibres technology? could be equally as damaging as breathing asbestos. Nanomaterials, sunscreens and cosmetics: Small ingredients, big risks Friends of the Earths report “Nanomaterials, sunscreens and cosmetics: Small ingredients, big risks" details the extensive use of nanomaterials in 116 products, from sunscreens and anti-aging The dangers of nanotechnology, a creams to shampoos and toothpastes, despite preliminary scientific warning to consumers evidence that many types of nanoparticles can be toxic. Although there is potential benefit to consumers, nanomaterials can also pose new threats to human health and the environment - Nanotech-based products offer warns consumer group. great potential but unknown risks Some experts push cautious approach as market keeps expanding© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 40
  41. 41. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 41
  42. 42. Risk level for selected Nanomaterials (Nano)-silver Carbon Nanotubes Carbon Black Low Risk Medium Risk High Risk© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 42
  43. 43. Case study: (Nano)-Silver applications Products today: • Textiles • Food-packaging • Self-sterilizing medical or consumer devices  More and more products are entering the • Washing machines market  Lack of risk data and categorization as pesticides raise concerns  NGO calls for Samsung “Nano Silver” washing machine recall Perceptual Risk  Long-term experience with silver-ion devices  Seems to be a low risk for workers and consumers  Many open questions concerning disposal of products (environmental risk) Production Risk  EPA (US) has regulated silver-ion-generating applications as pesticides  but only marketing of these products is Regulatory Risk affected Low Risk Medium Risk High Risk  Regulation based on environmental risks to be expected© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 43
  44. 44. Case study: Carbon Nanotubes Products today: • Composites • Electronic devices  Frequently compared with asbestos  Few “close-to-the-consumer” applications (e.g. food, cosmetics, pharmaceuticals) Perceptual Risk  Variety of production processes creates CNTs with different properties incl. unclear toxicity effects  Low exposure level (today)  Many safe applications (electronic devices) but also applications with unclear effects over Production Risk product-life-cycle  Regualtory framework for CNTs will probably change due to material specifics Regulatory Risk Low Risk Medium Risk High Risk© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 44
  45. 45. PCase study: Carbon Black  Used since decades without risk concerns coming up  Remaining risk:  Ultra fine dust (e.g. wheel abraison) •Car tires •Toner pigments  Cause of health complaints concerning emissions of office machines still Perceptual Risk unclear  High market relevancy and long time experience in manufacturing  No evidence for specific bodily or environmental harm at manufacturing or disposal Production Risk  No need for regulatory changes due to extensive data Regulatory Risk Low Risk Medium Risk High Risk© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 45
  46. 46. Technical risk assessment approaches Toxicological perspective Exposure Hazard Insurance perspective Frequency Severity© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 46
  47. 47. Insurance scenarios  Pollution spill from a nanoparticle production facility  Nanoparticle manufacture workers develop chronic illness  Nanoparticles leach from products to accumulate in the environment  Product recall due to research findings indicating product is a hazard  Liability claims on a company, directors and officers regarding a product that was indicated by research to be unsafe, but subsequently released to the consumer market.Source: Lloyds© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 47
  48. 48. Magic Nano - First Product liability claim with Nano?Product Aerosol sealing spray for making glass and ceramic surfaces water- and dirt-repellantLoss history 100 customers reported respiratory complaints Media: “First health-related product recall of an alleged nanotechnology consumer product” Insured product liability event (loss amount < 1 Mio EUR, secondary claims via social insurance agencies)Damage & loss analysis results No nano-sized ingredients (silicon dioxide) Potential cause of loss: Inhalation of very fine airborne droplets Lack of evidence base© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 48
  49. 49. Magic Nano - Lessons learnedReputational risk First impressions matter Incident was a wake-up call for the whole nano community Negative blast for a hitherto positive image of businessRecommendations Development of standards for terminology and labeling More transparency on use of nanomaterials and safety issues Appropriate research activities into human health and environmental impacts Risk Management: - Reputational damage exposure - Crisis communication© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 49
  50. 50. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 50
  51. 51. Risk Management process Risk Insurance identification solutions Risk avoidance provides the financial s sy ana ks R Risk i assessment Risk reduction, loss security to ease prevention (e.g. workplace safety the bump in the i l measures) balance sheet. Risk handling Risk transfer (e.g. insurance) Risk provisions (e.g. setting up reserves) Risk control© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 51
  52. 52. Risk categories unknown risks insurable risks elusive risks insured risks quantifiable risks© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27©Copyright Allianz SE 52
  53. 53. Insurability of nanotechnologies Criterion • Status quo • Assessability: • limited evidence base Probability and severity of losses quantifiable • latency effects / long term exposure • Randomness: Time of insured event unpredictable and • √ occurence independent of will of insured • wide variety of applications Mutuality • wide variety of chemical substances, sizes, surfaces Risk community, large number of risks, • various industry segments diversification • various sizes of clients • sub classes of widely used materials • Economic feasibility • strongly dependent on scenario Premium commensurate with the risk Causation • Agent in principle analytically provable Causal relationship between the action or • Signature diseases? omission of the insured and the resulting • Knowledge gaps can lead to legal risks damage / injury / financial loss© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 53
  54. 54. An insurer provides financial security for remainingrisks via insurance cover if: Predictable issues are positively and transparently handled Identify Assess risks risks Problematic processes/products do not enter RM market Cycle Monitor & Implement Unique or novel risks are identified early and Control measures managed properly Existing hazards are actively managed© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 54
  55. 55. What is needed to promote innovative technologies? Nanotechnology: Requirement profile of different stakeholders Manufacturer • Access to loans / equity capital • Insurances are a • Reliable results from safety/toxicology studies precondition for access • Information concerning safe handling of to capital markets nanomaterial incl. measuring methods • Risk costs can be • Support in compiling Material Safety Data distributed onto many Sheets (MSDS) shoulders which allows • Binding character of toxicological results and (excessive?) risks to be impact on regulatory framework taken • Open communication and information on both Consumer • Transparency via risks and benefits stakeholder dialogues, risk • Generally understandable risk and ingredients assessments and adequate information via media (e.g. internet, TV) incl. risk premiums labeling • Best available • Convenient for consumers and independent technology for loss test results prevention measures • Code of practice? Regulator • Uniform terminology • Acknowledged measuring methods and • What is an accepted standards risk level? • Valid toxicological research results© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 55
  56. 56. What is needed for a sustainable development ofNanotechnology? Risk Management/Risk Assessment  Risk assessments across the whole product lifecycle  Reliable results from safety/toxicology studies  Information concerning safe handling of nanomaterial incl. measuring methods  Support in compiling Material Safety Data Sheets (MSDS)  Binding character of toxicological results and impact on regulatory framework PROs: Limitations Supportive measures + Gives clear guidance how to - How much tests/evidence base  Development of best practice assess the risk of are required? guidelines for safe production nanomaterials and nano- enabled products - Must include the whole product and handling lifecycle  Stakeholder dialogues? - Variety of particles, production  Funding of risk research methodologies, applications - Limitations concerning adequate and standardised measuring methods and instruments© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 56
  57. 57. What is needed for a sustainable development ofNanotechnology? Risk communication and perception  Open communication and information on both risks and benefits  Generally understandable risk and ingredients information via media (e.g. internet, TV) incl. labeling  Convenient for consumers and independent test results PROs: Limitations Supportive measures + Understandable risk/benefit - What is a general accepted risk  Stakeholder dialogues? analyses increase the level and how to define it? acceptance level of nanotechnology - Risk/benefit methodology has to bridge the gap between being accurate enough and easy-to-understand© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 57
  58. 58. What is generally required to drive innovative technologiessustainable? Risk-/benefit How much Stakeholder analyses for a evidence of risks dialogues general accepted does a society risk level need? Moratorium versus How much corporate regulation is self- needed? responsibility Risk assessment: Is How should a …and what there evidence that a future best- can be the proactive practice Risk contribution Environmental, Social, Management of insurers? Governance (ESG) look like? Management signals a better overall Risk Management of a company© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 58
  59. 59. Table of contents 1 Allianz and AGC&S 2 Emerging risk definition 3 What is nanotechnology and where is it used? 4 Opportunities and risks from an insurers perspective 5 Risk assessment of nanorelated applications 6 What is needed to promote nanotechnologies in as sustainable manner? 7 Outlook© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 59
  60. 60. The Outlook Sustainable exploitation of nanotechnologies will lead to economic and technical progress that are of major importance to the global economy. Dedicated research on risks, high-quality risk management and continuous dialogue will lay foundation for positive public take-up of nanotech. Positive stewardship, complemented by responsible insurance will support the sustainable future of nanotech developments.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 60
  61. 61. Thank you for your attention! 61© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 61
  62. 62. DisclaimerThese assessments are, as always, subject to the disclaimer provided below.Cautionary Note Regarding Forward-Looking StatementsThe statements contained herein may include statements of future levels, (vi) the extent of credit defaults, (vii) interest rate levels, (viii) currencyexpectations and other forward-looking statements that are based exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changingon management’s current views and assumptions and involve known levels of competition, (x) changes in laws and regulations, includingand unknown risks and uncertainties that could cause actual results, monetary convergence and the European Monetary Union, (xi) changes inperformance or events to differ materially from those expressed or the policies of central banks and/or foreign governments, (xii) the impact ofimplied in such statements. In addition to statements which are forward- acquisitions, including related integration issues, (xiii) reorganizationlooking by reason of context, the words “may”, “will”, “should”, “expects”, measures, and (xiv) general competitive factors, in each case on a local,“plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, regional, national and/or global basis. Many of these factors may be more“potential”, or “continue” and similar expressions identify forward-looking likely to occur, or more pronounced, as a result of terrorist activities and theirstatements. Actual results, performance or events may differ materially consequences.from those in such statements due to, without limitation, (i) general economicconditions, including in particular economic conditions in the Allianz Group’score business and core markets, (ii) performance of financial markets,including emerging markets, and including market volatility, liquidity andcredit events (iii) the frequency and severity of insured loss events,including from natural catastrophes and including the development of loss No duty to update.expenses, (iv) mortality and morbidity levels and trends, (v) persistency The company assumes no obligation to update any information contained herein.© November 2012, Milano, Role of Insurance for Innovative Technologies: Nanotechnology27 Copyright Allianz SE 62

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