Identifying emerging claims trends is a challenge, particularly in relation to liability claims in a technologically advancing world. Given the rapid pace at which technology develops, it is unsurprising that risks often do not emerge until long after we have incorporated new technology into our everyday lives. This article aims to offer insight into emerging risks from the workplace and our social environments.
One such example is nanotechnology. Nanotechnology is the engineering of particles on the nanoscale, e.g. carbon nanotubes (CNTs). CNTs are thin carbon cylinders with strong electron mobility and conductivity. Yet while CNTs are in everything from construction materials to cosmetics, they could be the next asbestos. A laboratory study1 conducted on mice found that CNTs caused inflammation in the abdominal cavity, causing lesions to form in the mesothelium; the same effect as that caused by long fibres of asbestos. This inflammatory response can be a precursor to cancer in some cases of asbestosis, although further research is required to establish whether CNTs also cause cancer.
Understandably, insurers are keen to avoid another asbestos liability catastrophe and so are looking to anticipate the next big claims trend.
One such hazard is industrial deafness, or workplace-related noise-induced hearing loss2. Claims for noise induced hearing loss (NIHL) notified to insurers rose 189 per cent between 2011 and 2014, and since 2012 over 200,000 claims for industrial deafness have been submitted, according to figures from the Association of British Insurers.
However, less than a fifth of claims have been eligible for compensation, as most claims relate to exposures that occurred up to 30 years ago. As a result, there is a lack of quality evidence that can establish a causative link between the workplace and the hearing loss.
Some commentators have suggested that the number of industrial deafness claims may have peaked. Figures from the Institute and Faculty of Actuaries revealed deafness claims in the first half of 2015 were 8 per cent higher than the same period in 2013, with over 43,000 claims reported. However claims were 26 per cent lower in the second half of the year.
Even if claims are tailing off, industrial deafness is still a problem. Although noise exposure is regulated, research presented at a recent Health & Safety Laboratory Listen Up! conference showed that noise at certain frequencies can be damaging even at levels far below the legal threshold.
NIHL is also a product liability issue. NIHL among young people is growing; outside of the workplace it is estimated that numbers of young people with social noise exposure has tripled to approximately 19 per cent since the early 1980s3 and that 20 per cent of young people in the UK are regularly exposed to excessive levels of loud music.
Perhaps unsurprisingly, NIHL in young people coincides with a staggering increase in widespread use of personal listening devices (PLDs). In the EU alone, sales estimates range from 184-246 million for all portable audio devices sold between 2004 and 20084.
PLD manufacturers typically provide volume warnings, and many incorporate functions within the device to limit volume levels. However focusing solely on the volume ignores overall daily noise exposure, meaning prolonged use of headphones at a safe level could actually be unsafe.
Young people pose a significant claims risk to insurers, as their ears are medically more susceptible to the effects of noise exposure and the scale of the problem may not become evident for many years. Furthermore, entering into a contract with a child is voidable as the child can cancel the contract at any time before reaching 18 years of age.
In addition, the Consumer Protection Act (CPA) 1987 creates a regime of strict liability for defective products. Under the CPA a product is defective if “the safety of the product is not such as persons generally are entitled to expect”. Consumers are entitled to expect appropriate information and warnings regardless of age or vulnerability, so warnings will need to be extremely clear and obvious in order to deem a product safe.
While it is possible to defend occupational NIHL claims on grounds of causation if a large proportion of the population develop hearing loss symptoms consistent with noise as an underlying cause, such claims could prove more difficult to defend in the future.
The light that never goes out
Another product liability issue is the damage caused by blue light, widely used in light emitting diodes (LEDs). Like nanotechnology, LEDs are everywhere, including in our televisions, tablets and smartphones.
Blue light is not of itself dangerous; we are exposed to it daily from sunlight. But as our reliance on technology increases, so does the use of LEDs. Thus frequent use of our favourite technologies may permanently damage the retina, as the lens and pigment in the back of the eye provide only some protection against blue light5.
Currently, LEDs are subject to safety standards. But while products such as LEDs are safe on a component basis, the end product may be classified differently , simply because of the pace at which technology is advancing. Designers of new technological products cannot envisage how consumers shall use their products in the future. For example, LEDs are coated in a layer of phosphor used as a coating to convert blue LED light to white light. This layer deteriorates over time, meaning that the risk from a product containing LEDs increases with continued and prolonged use.
Children are at particular risk as they are exposed to blue light more than ever before. Products containing LEDs such as tablets and smartboards are used from an increasingly early age for both leisure and education purposes and with varying exposure distances.
Similarly to NIHL, the widespread use of LEDs means it would be difficult to prove that a particular product or device has caused injury. However that the courts have developed tests to respond to claims trends (such as the material contribution test for asbestos claims), demonstrates that LED liability risks should not be dismissed outright.
A bird in the hand
For some, the widespread use of technology has created a need to return to the simpler things in life - keeping chickens, for instance. Yet unfortunately, thieves are targeting high value, ‘hipster hen’ breeds such as Polish Frizzles and Burmese Bantams, and selling them on at a huge profit.
According to a UK insurer6, the number of stolen chicken insurance claims rose by a third last year compared to 2014, with the average cost of claims increasing from less than £500 to £1,441. It is suggested that a rise in celebrity farmers has led to an increase in demand for rare breeds of ‘posh’ chickens, creating a lucrative luxury poultry market – indeed, some rare eggs can be found online for more than £1000.
But it is not just rare poultry at risk; cats and dogs are also targeted by thieves looking to make money by holding pets to ransom or using them as bait in illicit dog-fights. Yet while there are nearly 17 million cats and dogs in the UK, only 25 per cent of dog-owners and 15 per cent of cat-owners have pet insurance. This is perhaps unsurprising given that insurance provides limited help for stolen pet owners. Most pet policies provide deliberately modest sums to discourage fraud and require owners to provide proof of purchase in order to receive the replacement cost of a stolen dog.
There is one silver lining that could potentially be an opportunity for insurers: microchipping, which became compulsory for all dogs on 6 April 2016. Microchipping can help reunite pets with owners and confirm true ownership in the event of a dispute. In its current form, the benefits of microchips are limited, as there are several microchip databases all requiring regular updating in order to be effective. However, as time progresses, so will technology; the streamlining of databases, increased data sharing and pet telematics could identify the locations of lost or stolen pets, making it easier to deter thieves and identify fraudulent claims.
Reading the runes: concluding thoughts
Ultimately, accurately identifying future claims trends is almost impossible. However, experience informs us that the products, trends and technologies we assume to be safe and adopt as part of our everyday lives are not without their risks. Simply because the benefits of a product or process are immediately apparent does not mean that all of the disadvantages are as well, and simply because we experience no immediate harm does not mean that we never will. Successful underwriting must keep pace with emerging risks – although it is always tempting to follow new markets, being aware of what might be around the corner in addition to careful drafting may be what makes the difference between a manageable new stream of claims and an avalanche.
Author Amy Teece