3D Printing. 3D printing throws up new set of risks to insurers, says Richard West of Kennedys Law LLP

The revolution in 3D printing brings along a new set of risks to insurers as liability potentially shifts away from manufacturers, says Richard West, Global Head of Liability Defence at London-based Kennedys Law LLP. West is also its Global Head of Client Innovation and a practising solicitor. “3D printing is already changing the way we think about manufacturing processes and is empowering a new generation of ‘makers’ of products, rather than simply being their consumers,” West told BusinessLine in an interaction.

Localising supply chains

At the same time, 3D printing is the latest stage in the standardisation of manufacture with the promise of localising supply chains. It’s no longer just about economies of scale and division of components when a single printer can produce all the components needed to make an entire product – whether a computer, a toy or indeed a building.

“Disruptive technologies usher in new eras of regulation. Consider how easy it is now to accurately scan and replicate devices, making it hard to protect intellectual property. Or the relative ease with which someone could create weapons or unregulated medical devices using 3D printing equipment,” points out Karim Derrick, Product and Innovation Director at Kennedys Kognitive Computing, the innovation division based in Technopark, Thiruvananthapuram, its only development office outside of the UK.

New areas of regulation

“These advances in engineering capability must be closely followed by the regulatory frameworks needed to protect our society. We should embrace the power of innovation for good,” Derrick added. Asked how new-age tech can reduce fraud and substantial costs associated with it, West said the more our actions and behaviour — at work, on the road, in homes — are exposed in terms of data, the easier it is to use machine intelligence to identify patterns in those activities. And if we can identify patterns of normal behaviour, then our ability to identify fraudulent behaviour is amplified.

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Data protection law

“Surveillance of our activities is fraught with the risk that our privacy rights may get impacted. As privacy law develops and evolves around the world led by the General Data Protection Regulation (GDPR) in Europe, the complexity in and around insurance underwriting and claims handling also increases. Data protection law is designed to protect individuals from being discriminated against, but the nature of insurance is to price risk by discriminating against those who are riskier. This creates a tension. Citizens have rights in respect of automated decision making, especially when there is a legal effect in that decision making, which is almost always the case with insurance. Similarly, citizens have rights in respect of profiling and algorithmic discrimination,” West explained.

Trillion connected devices

Projections that we may confront some one trillion connected devices by 2025 and ensuing explosion of data do have implications for the insurance sector, West added. “Parametric insurance is an exciting new concept where conditions for claim payment are built into monitoring devices, software or hardware, and then incorporated into policies. Explosion of connected devices increasingly removes the need for contentious claims payments when objects insured are self-monitoring.”

Elaborating, Derrick said, “If my harvest fails because of drought, weather monitoring can automatically trigger payment. A machine that detects a fault can request replacement or repair itself, no claim needs to be made. A house that detects water damage in a kitchen due to a serious leak can automatically initiate an emergency response and mitigation of a loss.” This explosion in data capture capability throws up an explosion in data archiving needs, too. “Just as well that our global capacity for data storage is following Moore’s law and scaling with our demand,” Derrick added.

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