Marijuana, Fracking, and 3D Printing: Tracking Emerging Issues in Insurance

December 15, 2015 / 4 min read

Emerging issues aren’t just trends that may affect insurers in the years to come. They’re trends that could change the marketplace and create new areas of insurance coverage needs for the next generation of big businesses.

Consider the following issues:

emerging issues

Legalization of Marijuana

The marijuana industry is undergoing rapid growth as states continue to legalize medical or recreational use of marijuana. So far, 23 states and the District of Columbia have medical marijuana programs, and four states and D.C. have legalized recreational use of marijuana.

Like other emerging issues, the legalization of marijuana presents insurers with many concerns—not least of which is the drug’s current status as a Schedule 1 narcotic at the federal level, which conflicts with state laws that have legalized medical or recreational marijuana. Schedule 1 narcotics are considered by the federal government to have the highest potential for abuse and are illegal to use or prescribe. This conflict between state and federal law has made it difficult for insurance professionals to offer services to marijuana businesses operating in states that have legalized the drug. But if the federal status does change, how will workers' compensation and employment law change, if at all, to accommodate marijuana use?

The drug's legal status notwithstanding, what are the risks of product liability for tainted products or for possible health effects of marijuana use? If marijuana is linked with negative health effects that outweigh its benefits, what would this mean for medicinal uses? Could dispensaries be sued for falsely advertising the health benefits of marijuana?

There’s also the issue of enforcing the law, both on the federal and the state level. Will federal agencies begin regulating marijuana the way they regulate tobacco companies, such as requiring health warnings or restricting sale and use of the product? What will that mean for insurance coverage for businesses and users? And how will state regulators address the risks of driving under the influence of marijuana? Are there reliable field tests to detect impairment, and how will a maximum level of impairment even be determined?

Hydraulic Fracturing

Hydraulic fracturing, or fracking, is a technique that’s been used for years to extract oil or gas from underground rock. But lately, the fracking industry has come under more intense scrutiny.

The process uses a pressurized fluid mix of water, proppant (usually a mix of sand or ceramic materials), and chemicals to break apart shale and release gas into a drilling well. The internal pressure of the rock then pushes the injected fluid to the surface (flowback), where it’s stored either in tanks for treatment, disposal, or recycling, or it’s injected back into underground wastewater disposal wells.

Besides the concerns that fracking could contaminate drinking water or emit unhealthy pollutants, the fluid injection process specifically has many worried since there are reports that it could be linked to earthquakes—even in places with historically very low rates of earthquake activity.

3D Printing

The 3D printing process, also known as additive manufacturing, produces objects by adding layers of polymers, powdered metals, or ceramics based on digital blueprints. The technology can radically change everything from industrial manufacturing to consumer goods production to healthcare. Think of the possibilities for medicine, when we can print individualized prosthetics, or for construction, when we can cheaply print materials from scratch.

But it’s still unclear if there are potential hazards when people use 3D printers in their homes or in factories. For instance, if a mechanic prints an auto part that ruins a customer’s car engine, who will have to pay for the damages—the 3D printer manufacturer, the mechanic, or the person who designed the part? And what does it mean for intellectual property when everyone can easily print copyrighted products?

Tracking Emerging Issues

Keeping up to date on emerging issues is critical for insurers, but it can often overwhelm staff time and resources.

At ISO, we have our own dedicated team tracking emerging issues that could affect the property/casualty industry. The team works to cull the information, research new risks and issues, gather insights and input from ISO subject matter experts, and solicit feedback from insurers and other industry professionals. The team manages an online portal to keep insurance professionals informed on issues that could prove critically important to their lines of business—and what solutions ISO may be developing to address them. The portal, available to all ISOnet^®subscribers, offers curated research on more than 40 emerging issues.

ISO also discusses emerging issues with customers through its Emerging Issues Panel meetings, held via teleconference several times a year.