It is difficult, at times, to separate hype from reality when assessing the business and commercial implications of technological innovations.
The process of 3-D printing provides an excellent case in point. Manufacturers have been using 3-D printing for almost 30 years, but only recently has this technology received extensive media coverage. Various technology pundits speculated that every home would eventually own a 3-D printer and that we would all be churning out our own products, from pasta to children’s toys.
So far, at least, it hasn’t worked out that way. The 3-D printing technology remains expensive for home use and no manufacturer has developed a “killer app” such as Word or Visicalc to encourage consumers to jump in. But, while 3-D printing has yet to take hold on the home front, its use continues to grow in commercial and industrial sectors. In August, for example, the Food and Drug Administration approved the use of 3-D printing for the manufacture of a new drug to fight epileptic seizures. Drug manufacturers and the makers of medical devices, among many others, are adapting the technology for products requiring specialized manufacturing at relatively low volumes.
As 3-D printing spreads to new commercial uses, insurers are grappling with difficult issues associated with the risks of this new technology. These include:
- The purity and quality of the raw materials used in the printing/manufacturing process;
- The possibility of intellectual property theft – represented by counterfeiting or piracy – as unauthorized manufacturers avail themselves of 3-D printers; and
- The assignment of product liability and the determination of how much liability lies with the printer manufacturer, the software developer, the supplier of materials and the manufacturer itself.
Another concern is that 3-D printing opens up new horizons for thieves and fraudsters. Recently, for example, firms have reported the theft of items from sealed shipping containers and the replacement of seals with counterfeit seals created using 3-D printing.
As is the case with other emerging risks such as cyber-crime and driverless cars, insurers should be gathering information and developing models to assess and price risks associated with 3-D printing. In addition, however, commercial P&C insurers should be helping clients identify and address these risks as they take shape. It is more cost-efficient, after all, to help a client prevent a problem than to process and pay a claim on an unforeseen event.