Healthcare Technology Featured Article

August 12, 2016

3D Printing: Implications for the Reinsurance Industry

3D printers typically work by “printing” layer after layer of melted plastic; a process known as “additive” manufacturing. But the technology has gone far beyond applying plastic filaments to make toys and models - we now have “inks” such as edible pastes, metal powders, fabrics and even living tissue. As 3D printing evolves, we're already seeing it in use in fine dining, furniture and automotive parts as well as medical and industrial laboratories. Innovative designs become reality at the touch of a button.

3D printing is transforming many industries and the manufacturing process itself. We have seen hospitals “print” working blood vessels, and factories create aluminum aircraft parts to exact specifications. Designs can be developed and tested through a process that involves nothing more than a file sent to a 3D printer. Even the average consumer can now buy a basic 3D printer and download files over the Internet for creating hundreds of different products.

3D Printing and Liability

Insurers will have to move swiftly to keep up with a rapidly changing industry landscape. Products that can go from design to production in mere minutes open the window on a number of potential issues arising from a rushed process, inadequate testing, poor construction materials, bugs in 3D printing software and the ever-more complicated printers themselves. Digital 3D designs may be distributed to thousands of consumers all over the world, opening the door to liability issues if the design itself is flawed or the file not calibrated to the many printers and 3D applications out there. As yet there is little standardization within the 3D printer industry for configuring files and standardizing materials.

Complex Approach to a Changing Technology

Litigations and liability could be even further complicated by multiple designers, and the different manufacturers of the hardware, software and printing materials. As the product in question will very often be the digital design itself, which another designer could easily alter, infringement of copyright or intellectual property rights will become a continued issue. Design engineers can download parts from potentially hundreds of available component plans and subtly alter each one for combination into an entirely new finished product. 3D printers can be used with 3D laser scanners to simply copy and reproduce existing products even without the 3D design file. Given the relative ease of manufacture, and the accuracy of the printing process, counterfeits will become even more prevalent and harder to detect.

Insurance and the New Manufacturing

Insurers will have to do extensive, fast-paced information gathering and analysis to determine risk levels across a variety of industries and markets that could be releasing new products on a daily basis. Brokers and underwriters must assess each organization's risk profile in accordance with a changing technology. This will require a level of familiarity with the 3D printing process from both a technical and business perspective. Risk assessment and management must become a more complex and fluid part of insurance for business in order to provide coverage that can benefit the client without bankrupting the insurer. Both insurers and manufacturers will be forced to integrate risk management into the design process in order to avoid situations where release of a product only compounds the company's liability.

There are actually very few such cases to date, but as the technology evolves and the number of working 3D printer operations expands, questions of ownership and liability will increase as well. In order to mitigate the risks, it falls upon the insurer to calculate the potential risks and issue policies that provide adequate protection at reasonable rates. While there are few case studies to go on, and the very real possibility of costly errors at this early stage, insurers who delay or ignore the potential business could also stand to lose millions if they stand on the sidelines waiting for standardization rather than becoming part of it.

Edited by Alicia Young

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