Emerging Risks Report: Q1, 2017
XL Catlin’s Emerging Risk Task Force actively monitors a wide array of emerging risks to provide our underwriters, as well as clients, with pertinent information regarding new and existing emerging risks. This quarterly report provides key highlights and developments for the emerging risks that have recently generated notable activity and media attention.
- In 2016 we observed a notable increase in geopolitical risk stemming from a number of significant unpredictable outcomes such as elections / referendums, increasing nationalist sentiment, instability in the Middle East and continued widespread migration, and terror attacks.
- These developments (and others) have and may continue to impact and influence economic, societal and legal environments around the world. Further, there is greater attention to the growing discontent with political establishments and shifts towards deglobalization.
- In 2017, there will be uncertainty over foreign policy, future trade agreements under new leadership and the rising influence from populist groups significantly affecting regional and international relations and business (e.g. US participation in TPP and/or NAFTA; UK and passporting rights to the EU).
- The interconnectivity of geopolitical challenges with other risks can prove to be more challenging to businesses in a number of sectors due to the unknown duration and volatility of circumstances. As such, it is believed that these challenges will continue resulting in possible economic and societal implications due to: shifts in geopolitical alliances, foreign policy changes, cultural polarization and a rise in nationalism.
E – Cigarettes
- Despite exponential growth in the e-cigarette market in recent years, there are still concerns around the safety, use and regulation of electronic cigarettes.
- Electronic cigarettes (or e-cigarettes) are battery-operated products designed to turn nicotine, flavors and other chemicals into a vapor that is inhaled by the user.
- Globally, there are differing views regarding the benefits and possible dangers of long-term e-cigarette use:
Regulators and health experts in some countries have expressed concerns for major health and social issues from prolonged e-cigarette use, including its potential as a ‘gateway’ to conventional cigarettes for children and teenagers. There is also uncertainty regarding the long-term effects of exposure to certain chemicals used in flavored liquids (e-liquids) used in the products
In other countries, however, e-cigarettes are viewed as a low-risk alternative to smoking and even marketed as effective cessation tools for smokers
E-cigarettes also pose a risk of injury from devices catching fire or exploding whilst being used, carried or charged.
There is potential product liability risk to manufacturers, suppliers and distributors of e-cigarettes. However, it is worth noting the ongoing efforts of various national and federal governments towards regulating manufacturing and product quality; restrictions on marketing of e-cigarettes to minors; and rules on health warning labels that could in the long term potentially reduce the risk exposure of these products.
Augmented Reality / Virtual Reality
- There has been growing interest in the use of augmented reality and virtual reality in recent months as these applications become increasingly accessible and visible to consumers. Over the past year there have also been significant investments and subsequent advancements by major technology companies and investors.
- Augmented reality and virtual reality refer to software that enables users to interact with a digital interface which either ‘augments’ or transforms their real world experience. As the cost of mobile devices and technology decreases, and there is greater accessibility and opportunities to utilize digital platforms and new sources of information (i.e. Internet of Things).
- AR / VR applications already have numerous uses across several industries that continue to expand –
Augmented reality is currently used in gaming, advertising (e.g. interactive ads in print media), navigation, manufacturing, and design.
Virtual reality is more immersive and usually involves wearing headgear. It is used in the military, education, entertainment and gaming industries. Major advancements have also been made in medical and surgical technology using AR / VR technology.
While still in early stages of widespread adoption, there are potential risks and legal issues associated with AR / VR including but not limited to:third party liability, product liability, negligence, workers’ compensation / employer’s liability, cyber risks and property damage implications. Other considerations are poorly protected AR / VR platforms and devices which may also be vulnerable to cyber malware, phishing, PII theft and poor and/or failed implementation of AR / VR technology.
As with many emerging technologies, there are operational opportunities for (re)insurance that could potentially reduce operational and training expenses, and enable real-time virtual access to insured locations, as well as greater accessibility to insureds’ data in real-time.
- While most people are familiar with the risks posed by antimicrobial resistance (AMR), there is now a growing concern relating to the increasing number of resistant microorganisms coinciding with the lack of new antibiotic development.
- Antimicrobial resistance (AMR) most commonly refers to the increasing resistance of microorganisms (e.g. bacteria, viruses and parasites) to existing drugs. This emerging issue generated media attention in 2016 following a mandate by the United Nations and World Health Organization to address the threat to public health and global economic stability arising from AMR.
- Antimicrobial resistance stems from misuse and / or overuse of antibiotic drugs in addition to the natural genetic evolution of the microbial organisms. Drug resistant bacteria are usually spread through the food supply, direct contact with animals, and the environment. Additionally, the use of antibiotics to treat crops further increases potential contamination of soil and water sources, and possibly faster development of resistance.
- Drug resistance could make it increasingly difficult to treat common diseases and viruses, as well as global outbreaks leading to pandemics. Potential implications from AMR could also include business interruption, workers’ compensation / employers’ liability, public liability (healthcare / hospitals), medical malpractice and product liability, among others.
Current insurance policies, including those provided by the XL Catlin group of companies, may not address emerging risks described here. It is always important to discuss the terms and conditions of your coverage with your broker and insurer to understand how coverage may address specific situations.
The information contained herein is intended for informational purposes only. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details.