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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.

Geopolitical risk

  • 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.

 

As with many emerging technologies, there are operational opportunities for (re)insurance that could potentially reduce operational and training expenses...

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.

Antimicrobial Resistance

  • 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.
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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.