Additive risk: Insurance and 3D printing

Human organs, guns and high heels are just a few objects manufactured using the fast-evolving technology of additive manufacturing, or 3D printing. There has been burgeoning interest in it as its cost has tumbled and cottage manufacturing has become reality. Increased demand for 3D printing entails increased risk. The novelty of this technology means that underwriting discipline in affected classes is nascent. This post highlights some key emerging risks. Liability Legal principles surrounding liability for defective products have been settled many years, but there is little jurisprudence in the context of a 3D printing process. This creates uncertainty about liability, involving entities which may have had no previous exposure – these include designers and manufacturers of printers, the designers of the software, the designers of the product, or even the entity that printed it. Liability insurers will want to analyse each manufacturing process to understand where responsibility lies to underwrite the risk. This will not always be clear given the novelty of the technology and the many ways it can be (ab)used. 3D printing also lends itself to a more flexible supply chain – businesses may seek to reduce cost by supplying e-designs allowing customers to print their products for themselves. This limits the opportunities for quality control and stresses the adequacy of the design/printing process. Greater reliance on instructions will be required. On the other hand, 3D printing reduces the risk of human error during the manufacturing process. Suppliers may in-house the printing of components previously sourced from third parties. Again, this may radically change their risk profile. 3D printing technology increases exposure to IP infringements – it lends itself to product "imitation" and printing software will have some degree of IP protection. Insurers will need to analyse carefully their exposure here, and in the converse situation where the insured's designs are misappropriated, misused or modified by third parties. The wide availability of 3D printing e-designs over the internet may even attract trade or export control compliance obligations of which the designer (and their insurer) will need to be aware. Property Property risks may also increase – printing can be slow raising which means it might be unattended. As it requires heat, increased fire hazard may arise. Business interruption profiles may change (positively) as more manufacturing is in-housed. The future The commercial opportunities offered by 3D printing are enormous and there is no doubt that the evolution in the risk landscape entails positives for insurers. The streamlining it creates will inevitably flow through to insurance risk. Insurers can evolve with this exciting industry by ensuring that their underwriting practices and wordings complement it.  

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