Although many of us still think of this technology as pie-in-the-sky, 3D-printing has been around for over 30 years. In fact, 3D-printers are no longer even specialist equipment, with simple versions available at retailers like Officeworks for a few hundred dollars.
It’s a technology which will transform our lives, according to Suncorp risk engineer Wayne Thompson, who believes the opportunities flowing from its introduction are enormous. “It will change the face of manufacturing and warehousing. Huge production lines will be reduced and production could be done in a simple office setting,” he explains.
The technology is already so advanced 3D-printers can produce weapons, medical prosthetics, medicines and cars. “People often restrict their thinking to an object printed in plastic, however, it can be in metal or a composite thereof – even food,” Thompson says.
“The technology is allowing anyone to create customised products on demand and at affordable prices. In Brazil, it’s already quite common to see shops using 3D-printing to create personalised covers for mobile phones.”
INNOVATION COMES WITH RISKS
Although 3D-printing is giving rise to exciting opportunities, it is also begetting new risks for the insurance industry.
There will be demand for brokers who are up-to-date with cyber technology and for those, there is the potential for additional business.
“You can copy an existing product, which presents risks in terms of intellectual property infringements, product liability and design and data theft,” Thompson explains.
The technology appears on the emerging risk register of many large insurers and has the potential to shake up insurance lines ranging from product and public liability through to professional indemnity, machinery breakdown, employers’ liability, business interruption, D&O and medical malpractice.
According to Allianz Australia general manager corporate affairs, Nicholas Scofield, the growing popularity of 3D-printing is accompanied by insurance risk. “As printer prices fall and people see it is cheap and convenient, their use will grow. However, cheaper price points are likely to make this a business risk first, rather than one for householders.”
QUANTIFYING THE DANGERS
Suncorp is actively investigating the risk impact of 3D-printing “We are profiling against existing insurance products to identify the gaps, so we can deliver insurance offerings that encompass this technology,” Thompson notes.
FIVE FASCINATING FUTURES FROM 3D-PRINTING
A particular challenge is how it affects cyber security policies. “If a manufacturer is sending data files to people to print from, hacking may be a problem. Even if the file is encrypted, it could be hacked and the IP within it stolen,” Scofield says.
Other significant risk areas are fire and health and safety. “The equipment operates at high temperatures and typically the printing takes time to materialise, so people leave the printer unattended for several hours and this may cause a fire,” Thompson explains.
“From a safety and health perspective, heating a raw material such as plastic involves unhealthy air emissions and acrid smoke. The printers use nanotechnology, so there is a risk micro-particles could be ingested through the skin and lungs.”
WHERE IS THE LIABILITY?
Product liability is another area of concern, as traditionally the product manufacturer is liable for a defective product causing injury or loss, but with 3D-printing, the issue is not as clear cut.
“The risk potential changes. When people manufacture at home they download software and print the item. If it is defective and causes injury, where does the liability rest?” Scofield notes.
When people manufacture at home they download software and print the item. If it is defective and causes injury, where does the liability rest?
“Does the software provider have the risk, or is it transferred? These printers often use some form of plastic mix, but what if it is mixed incorrectly?”
This technology raises tricky issues for the insurance industry, he says. “Is there a shift in who is the manufacturer of the product? It may mean insurers need to change the conditions and exclusions in existing policies.”
Retailers may not be immune either. “There are potential risks for printer retailers. Product liability does not always flow right back to the manufacturer, sellers also have a product liability risk. It may be the risk is shifting from one part of the supply chain to another; even to the end consumer,” Scofield explains.
PRODUCTS MAY NEED TWEAKING
Although the risks are still being debated, insurers are considering whether existing products provide sufficient cover, or if new ones are needed.
“The question is whether there is anything truly different about 3D-printing from other manufacturing process that requires entirely new insurance policies, or whether it is simply a matter of expanding already existing products,” Thompson notes.
Scofield agrees the question is yet to be resolved, but believes in the end few product lines will be affected. “There will more likely be a tweaking of policy wording than new covers. These are traditional risks relating to a new technology, rather than a completely new risk no-one has ever thought of before.”
BROKERS NEED TO BEWARE
From the broker perspective, 3D-printing is unlikely to provide a new business bonanza.
“It is hard to see there is an enormous latent commercial opportunity waiting to burst out and have a significant impact on the bottom line. However, there will be demand for brokers who are up-to-date with cyber technology and for those, there is the potential for additional business,” Scofield says.
Thompson agrees: “Brokers need to be aware of this technology as there are many risks, but it is not likely to lead to a particular line of insurance on offer in the future.”
Despite this, brokers need to be careful when it comes to 3D-printing to ensure their SME clients do not lose their cover. For many businesses a shift to 3Dmanufacturing may represent a business operating drift, which needs to be reported to the insurer.
“We look at the profile of a business to determine risk and the appropriate policy. If you introduce an extra risk you need to inform the insurer, but clients may not realise there is a risk associated with 3D-printers,” Thompson explains.
“Brokers need to identify the existence of this technology in a client’s premises.”
Scofield agrees brokers need to understand its implications as an emerging business risk. “As 3D-printers become more common, clients will seek out brokers who are up-to-date and able to help them determine if they are taking on risk and need protection.
This story was originally published in Insurance Adviser, August 2016, and is written by Janine Mace.