As technological advances are rapidly made we face an ever-increasing degree of associated emerging risk. The level of risks and the challenges they bring for insurers and their customers are still to be analysed but knowledge and preparation is key to ensuring that all risks are mitigated. As these emerging risks and their associated technologies make their way into society, we are better able to understand their challenges, benefits and consequences.
When we talk about emerging risks, we are referring to new technologies such as driverless cars, drones, the Internet of Things (IoT), e-cigarettes and nano-technology, for example. Emerging risks offer insurers huge opportunities both in the assessment of risks and in identifying new markets and innovative products.
In the field of product liability, supply chains and the traceability of components and designs needs to be scrutinised. Probably the most tangible example of an emerging risk is driverless cars. With cars being tested in the US and the UK, it has been estimated that there could be as many as 230,000 driverless cars be sold globally by 2025, rising to 11.8 million in 2035, according to global analytics company IHS.
The theory is that the level of cutting-edge technology employed in driverless cars virtually eliminates the possibility of a collision, but inevitably something will go wrong, it needs to be considered whether liability lies with the operator of the vehicle, the manufacturer, the distributor, the service provider or the company that supplies the data to the car’s computer.
The development of wireless technology has created a myriad of applications across a wide range of sectors including healthcare, known as mHealth, where is it making the most waves. The snappy new label that has been assigned to this genre is The Internet of Things (IoT). Essentially, IoT describes the interconnection of multiple devices through the use of radio frequency technology. This, in turn, enables the exchange of data across countless applications and industries.
There has recently been a surge in the development of wearable or implantable devices that are able to measure and transmit information from patients to healthcare professionals. These are primarily used to monitor chronic conditions such as diabetes and heart disease. Furthermore, many sensors and wearables are being developed to detect accidents, fits, seizures or heart attacks in old or infirm people and then alert the emergency services.
According to IHS, the global market for wearable technology will rise to 210 million unit shipments and will generate $30bn in revenues by 2018. It also estimates that by 2017 some 18.2 million health and wellness systems will be shipped worldwide, with global revenues for this market expected to reach $16.3bn. As with all emerging risks, there is always the potential for such technologies to malfunction and relay incorrect information, leading to the administering of inappropriate treatment by a physician.
The use of drones is on the increase. By 2020, it is estimated that about 30,000 small unmanned aircrafts will be used for all types of business purposes. A multitude of insurance liability and coverage issues must be addressed, ranging from personal injury and invasion of privacy to aerial surveillance and data collection.
Knowledge of the changing regulatory environment is essential and ensuring appropriate wordings, conditions and jurisdictional limitations will be critical in managing exposure. However even where exclusions are applied, understanding the mechanism of a failure will be critical and – as with assessing liability – will require specialist expertise and legal advice.
BLM's RED blog provides the latest information and expert analysis on these issues.