Nanotechnology Overview

Nanotechnology The Plastics of the 21st Century?

2006

Contents

Contents 1

Forew ord

2

E xecutive Summary

3

Introduction

4

The Relationship between Insurance and Innovation

5

Overview of Nanotechnology

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B e n e f i t s t o G l o b a l E c o n o my

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Manufacturing

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Environment

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Medicine

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Information Technology

A s s o c i at e d R i s k s

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Attribute-Related Concerns

8

Types of Exposures

8

Populations Affected

R e g u l a tion L i kely Evolution of Insurance Coverage

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Stage I: The Early Study Period

12

Stage II: The Fear Phase

13

Stage III: The Mature Stage

14

Conclusion

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Selected References

Foreword

Foreword This report was prepared by Guy Carpenter & Company, Inc. in conjunction with Dr. Robert Blaunstein, National Director of Loss Control and Underwriting Manager for American Safety Insurance Company. Previously, Dr. Blaunstein was Managing Director and co-founder of Seneca Environmental Management (SEM), Vice President of Seneca Specialty Company and Vice President of Crum and Forster Specialty Insurance Company. While Assistant Professor of Physics at the University of Tennessee and consulting scientist to the Oak Ridge National Laboratory, Dr. Blaunstein conducted research, provided instruction and supervised doctoral students in the area of atomic and molecular radiation physics. A frequent lecturer and consultant to governmental and industrial leaders throughout the world, Dr. Blaunstein was a Public Health Service Fellow and member of the United States Chamber of Commerce, Environment Committee and is a member of the American Physical Society, The American Society of Testing and Materials, National Groundwater Association and the Sigma Xi Honorary Society. He received his Ph.D. in physics from the University of Tennessee and an M.S. degree in physics from Case Western Reserve University.

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Executive Summary

Executive Summary > Many scientists view nanotechnology as the revolutionary technology of the 21st century. Just as plastics were a pervasive and revolutionary product of the 20th century, nanotechnology products are expected to have widespread use and change our lives in myriad ways. Nanotechnology products are currently in use in more than 200 consumer products, ranging from air conditioners to sunscreen. > Nanotechnology is based on matter that is so small that it exists in the atomic and molecular realm. At this size, the substance's physical, chemical and biological properties frequently are different from what they were at the micrometer and larger scales. By harnessing these new properties, researchers have found that they can develop materials, devices and systems that are superior to those in use today. > As with practically all scientific breakthroughs, nanotechnology carries both risks and rewards. While it appears almost certain that the rewards will greatly outweigh the risks, attention must be paid to possible dangers to the well-being of humans from this new technology. > The insurance industry has a major role to play in helping society capture the benefits of nanotechnology by helping to spread the risks. > Nanotechnology risks are covered under a wide variety of covers, including products liability, workers compensation, professional liability and general liability. > Insurance cover for nanotechnology products are expected to evolve in three stages: 1. An early study period, currently underway, where insurers and reinsurers study the issue. 2. The fear phase, frequently accentuated by unfounded but terrifying rumors. This stage is expected to be short, given the generally benign nature of nanotechnology products. 3. The mature phase, where cover routinely is provided either within conventional products or on a standalone basis. > Government regulation of nanotechnology is in its infancy. Existing regulations in Europe or the United States generally do not distinguish between bulk and nanoscale size. In particular, detection tools for the routine checking of toxins are not adequate to address the smallness of nano-sized matter. > There is a great opportunity now for insurers to work with governments to shape a regulatory environment that will foster the positive use of nanotechnology while sensibly addressing the risks. > Nanotechnology carries a great promise for improved economic and social well-being. Given sensible management of the risk by governments and the insurance industry, this new scientific advancement can add greatly to the progress of humanity.

Introduction

Introduction Nanotechnology is a generic term for applications that work with matter that is so small that it exists in the atomic and molecular realm. At this size, the substance's physical, chemical and biological properties are different from what they were at the micrometer and larger scales. By harnessing these new properties, researchers have found that they can develop materials, devices and systems that are superior to those in use today. From the way we communicate, to the methods used to diagnose and treat our illnesses, to the speed with which our computers process data, this new technology promises to enhance our lives in almost limitless ways. Nanotechnology currently is being used to improve existing products and processes, for example, by strengthening the material used in golf clubs and bicycle frames, creating stain- and water-repellant clothing and producing wear-resistant paints and coatings. One developing area in nanotechnology is that of self-assembly, whereby materials will be able to grow themselves. Such innovations will not only increase productivity, but also will create new materials in a process known as “dynamic self-assembly.” In the longer term, however, nanotechnology is likely to result in completely revolutionary advances. Promising uses of nanoscale particles may include the cleanup of heavily polluted sites, more effective diagnosis and treatment of cancer and other diseases, lighting that is twice as energy-efficient as what is currently available, cleaner manufacturing techniques and much smaller and more powerful computers. Research indicates that nanotechnology even may help create an alternative fuel to power our automobiles. As optimistic as researchers may be, however, responsible decisions must be made regarding its development and use. Growing evidence suggests that nanoparticles–the basic building blocks of nanotechnology and the tiniest materials ever engineered and produced–may pose environmental, health and safety risks. Consequently, if the insurance industry is to support the myriad positive uses of nanotechnology while not incurring major long-term losses, it must have a thorough understanding of how nanomaterials are produced, stored, used and discarded.

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The Relationship Between Insurance and Innovation

The Relationship Between Insurance and Innovation Risk is a major barrier to innovation. Taking a risk, however, is almost always the first step in any type of progress. The productivity of the global economy depends on companies that are willing to find new and better ways of doing things despite the potential perils involved. If they start to be ruled by fear of liability, our global development could be in jeopardy. By helping businesses manage the risks associated with product development, insurers play an important role in stimulating innovation and helping our world move forward in positive ways. From the early days of marine exploration, to the first satellite launch, to the development of cutting-edge technologies, insurers have provided a critical safety net that has supported and encouraged the creative process. Given the revolutionary potential of nanotechnology and its expected use in virtually every industry, it is incumbent upon insurers to help accelerate its benefits. At the same time, developing a thorough understanding of the risks involved is critical.

Overview of Nanotechnology

Overview of Nanotechnology Nanotechnology involves both: > The deliberate manipulation of matter by certain chemical and/or physical processes (referred to as “bottom-up” production) to create materials with specific properties that are not displayed in their larger forms. > The use of manufacturing processes such as milling or grinding (called “top-down” production) to produce nanosized particles. These particles may or may not have properties different from those of the bulk material from which they are developed. At the core of any process involving nanotechnology is a nanometer (nm), which is one billionth of a meter and 10,000 times smaller than anything that the human eye can see. Although the trend towards making things smaller is nothing new, the reduction of materials to the size of nanometers results in both new and altered properties. For example, some materials begin to exhibit extraordinary electrical conductance, resistance or new magnetic properties. Some become bactericides, and others demonstrate exceptional strength and water-repellency. Certain nanomaterials can even interact with biomolecules, which may enable them to improve medical diagnosis and tissue and organ replacement. These unique physical, chemical and biological properties generally exist for two reasons: > At the scale of nanometers, particles and structures have a very high surface-to-mass ratio. This makes them highly reactive compared to their bulk structure, and this reactivity can be channeled to produce superior products. > Nanometers exist in the realm of quantum physics, and quantum properties are similarly valuable in developing enhanced materials.

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Benefits to Global Economy: Manufacturing

Benefits to Global Economy This push to extend the boundaries of science comes just in time. According to estimates by the United Nations World Resources 2000 report, our world population will expand by 50 percent in the next 50 years, world economic activity will grow by 500 percent and use of global energy and materials will increase by 300 percent. The ramifications of these numbers are staggering, and the development of new ways to respond to burgeoning demands is critical. Nanotechnology-driven processes are spreading rapidly, with positive uses that may be virtually limitless. Current and longer-term benefits are likely to be realized in several key areas. Manufacturing

The benefits of nanotechnology to manufacturing are, and likely will continue to be, considerable. As noted earlier, the process of breaking material down into nanoparticles allows it to be rebuilt atom by atom, in order to create products with superior strength, decreased weight and size and impervious coatings. Nanotechnology also will extend miniaturization to a level that few of us could have imagined. From the size of computer chips, to the space required for the design and manufacture of products, we will need to redefine our notion of “small.” An auxiliary benefit is that nanotechnology-driven manufacturing will not produce the same types or amounts of waste as did previous production methods. For example, fewer raw materials are required, which means less need to use up natural resources. This increased consumption also may mean decreased waste. In addition, processes likely will become less labor-intensive since, once a molecular manufacturing process is in place, fewer people will be needed to make it run.

Environment

Nanotechnology-based processes promise higher agricultural yields, diminished pollution, renewable energy sources and less expensive water filtration systems. The U.S. Environmental Protection Agency reports in its draft white paper on this subject that nanotechnology could reduce worldwide energy consumption by as much as 14.6 percent, which will decrease carbon emissions and save billions of dollars per year. Nanotechnology also has the potential to control pollution through “source reduction.” This is a method of eliminating toxic waste at its source, with the understanding that releasing the waste into the environment is the last resort. Source reduction can be achieved by cleaning up existing processes or by reducing consumption of resources where such consumption creates pollution. There are several examples of how nanotechnologies can help our environment. Contaminant Detection

One nanotechnology-based application expected to be introduced in the near term is enhanced sensors for detecting biological and chemical contaminants. These sensors will be able to identify harmful agents at very low environmental concentrations, reducing measuring costs and improving specificity. Waste Site Remediation and Treatment

Zero-valent iron has been used successfully to treat contaminants in groundwater by forming a permeable reactive wall. Nanoscale iron particles also may be used to counteract dense nonaqueous phase liquid (DNAPL) contaminants found in aquifers, which can substantially reduce the cost of environmental cleanups.

Benefits to Global Economy: Medicine

Other nanomaterials also show promise in breaking down trichloroethylene, tetrachloroethylene and carbon tetrachloride, all serious contaminants. Reduction of Global Energy Demands

Nanotechnology can contribute to reduced energy demands by creating lighter materials for transportation vehicles, enabling the reflectivity of roofing material and improving the use of alternative energy technologies such as solar energy. It also can allow the molecular-level control of industrial catalysis, improve the production of hydrogen by solar power and reduce electrical transmission line losses. As previously noted, given these benefits, the annual reduction in U.S. energy consumption could reach nearly 15 percent. Although it is a long way from commercialization, the development of an alternative fuel source is a potential application of nanotechnology that is becoming more critical each day. Research is being conducted to determine the effectiveness of carbon nanotubes to store hydrogen, which could lead to a fuel that powers not only cars but also laptop computers, cellular phones, digital cameras and various other electronic devices. Medicine

Some of the most promising findings have been in the area of health and medicine, where nanotechnology is expected to revolutionize the ways that we detect, prevent and treat various diseases and medical conditions. The National Institutes of Health has funded research in such areas as the development of a nanotechnology-based targeted delivery system for anti-cancer drugs, creation of a nano-fiber technology for blood vessel replacements and the design of a method to control delivery of medication to treat drug and alcohol addictions. These and other studies show that, because nanoparticles are so much smaller than human cells, they can function within cells to detect diseases in their very early stages and administer treatment right to the source.

Information Technology

Nanotechnology also offers tremendous benefits to the computer industry. Many major companies are working with nanoparticles to create significantly smaller storage devices than those currently available, as well as processors that will run many times faster than those on the market without any additional power consumption.

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Associated Risks: Attribute-Related Concerns

Associated Risks Although there are now only a limited number of products in the marketplace that contain engineered nanomaterials, the pace of nanotechnology development virtually assures that this will not be the case for too long. Consequently, the government, insurers and other key industry participants–both in the United States and abroad–are concerned about the associated environmental, health and safety impact. These interested parties are working together to develop a better understanding of nanomaterial's properties and risks. Attribute-Related Concerns

The following attributes of nanoparticles create a number of unknown exposures: > Size of particles: The size of nanoparticles makes them incapable of being measured using normal techniques. > Increased reactivity and conductivity: Nanoparticles are more reactive and conductive than particles larger in size. As such, materials that have been benign in the past may become toxic in nanoparticle form. > Routes of exposure: Because of their size, nanoparticles can be inhaled or ingested and may even enter the body through the skin. In addition, they are capable of crossing the blood-brain barrier, which protects the brain against contamination.

Types of Exposures

Health

To predict the health risks associated with nanomaterials, we must know the facts, such as routes of exposure, the number of particles actually absorbed, movement of materials once they enter the body and their impact on the body's regulatory system. Adequate information is not yet available in these areas to determine with any certainty whether, or how, nanotechnology can affect our health. Research has suggested, however, that nanoparticles may be able to enter the body through routes impenetrable by larger particles and then possibly gain entry into the circulatory system. Studies in rats also have shown that ultrafine particles smaller than 100 nanometers are more capable than larger particles of the same substance of causing lung inflammation and tumors. In addition, there are concerns that nanoparticles may interfere with the body's biological processes and potentially affect the immune system. Nevertheless, many more studies need to be completed before any health risks associated with nanotechnology are more than just a matter of speculation. Safety

Very little is known about the safety risks presented by engineered nanomaterials. Given their unique properties, particularly their increased reactivity and electrical conductivity, safety concerns are focusing on whether nanomaterials could cause fires or explosions. E n vir o n m e n t a l

Because nanoparticles behave differently from larger particles, questions have arisen about whether they can pollute the water supply or damage crops during processes that release these particles into the air, soil or water. Again, studies in this area are in their infancy. Populations Affected

In the short term, the major health and safety risks will be to researchers in laboratories and production staff exposed during the manufacturing of nanomaterials. People in these occupations must be aware of the potential hazards of using materials that have unknown properties, and they must take measures to mitigate their risks. However, their activities are contained and generally do not pose a threat to the public or to the environment.

Associated Risks: Populations Affected

C o m m o n T y p e s o f N a n o m aterials Among the many types of nanotechnology-produced materials, four in particular are receiving significant attention: buckyballs, nanoparticles, carbon nanotubes and quantum dots.

Buckyballs A buckyball (short for Buckminster Fullerene) is a molecule containing carbon atoms that are bound together into a hollow sphere. Because carbon atoms bond to many other types of atoms, a buckyball can be used to create larger customized molecules. Perhaps the most exciting potential for buckeyballs is in the fields of health and medicine. Because nanomaterials are hundreds to thousands of times smaller than human cells, and are similar in size to biological molecules, they can react with biomolecules on the surface of cells or within cells. Using buckyballs, scientists may be able to create nanodevices that can enter cells or even move easily throughout the bloodstream. These devices may thus provide access to parts of the body that were previously not easily accessible. For example, it is hoped that buckyballs may be used in the targeted delivery of medications directly to infected regions of the body. By placing the medication inside an array of buckyballs and injecting them into the bloodstream, the buckyballs can find their way to the diseased site and release the drug. Nanoparticles Nanoparticles are tiny particles consisting of a single element or compound. Well known examples include titanium dioxide nanopowder (used in suntan lotions and cosmetics) and ferrous oxide particles (used in imaging, such as x-ray films). What makes nanoparticles interesting and useful is that they exhibit properties that differ from the bulk material from which they are derived. They can increase material strength, provide impervious and slippery coatings and improve energy transfer in solar cells. Carbon Nanotubes Carbon nanotubes are composed of carbon atoms bound together into long thin tubes less than 2 nm in diameter. Classified as either single-walled or multiwalled, their extraordinary properties include a density of 1.4 grams/cc, compared with aluminum at 2.7 grams/cc; tensile strength of 45 billon pascals, while steel alloys break at 2 billion pascals; and the ability to carry 1 billion amps/cm2, whereas copper wires burn out at 1 million amps/cm2. Some of the more positive uses of carbon nanotubes may be in the design of semiconductors, chemical and genetic probes and field emission based devices such as flat-panel displays. Quantum Dots A quantum dot is a nanosized crystal that emits light after an outside source, such as ultraviolet light, and excites the electrons in the material. Quantum dots are generally inert in the body and consequently are very useful in tagging proteins and nucleic acids. When ultraviolet light is shined on a sample, the quantum dots glow, indicating the locations of attached proteins and yielding substantial useful information.

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Regulation

Regulation Regulators in the United States, the European Union and elsewhere around the world believe that nanoparticles represent an entirely new risk and that it is necessary to carry out an extensive analysis of the risk. Such studies then can form the basis for government and international regulations. Existing regulations may prove to be grossly inadequate in providing a safe environment in a world of nanotechnology products. Studies of the impact of airborne particles generally have shown that the smaller the particles, the more toxic they become. This is due in part to the fact that, given the same mass per volume, the dose in terms of particle numbers increases as particle size decreases. As a result, standards developed for mass products may prove to be highly insufficient for nano products. In general, it is to be hoped that regulation of nanotechnology will be conducted in a comprehensive fashion, taking account of the specific manufacturing and use environments of these new products. It is likely that the silo form of substance regulation in place for mass products may not be appropriate for products of nano size, where a high degree of reactivity tends to change the level of risk across different environments.

Likely Evolution of Insurance Covers: Stage I: The Early Study Period

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Likely Evolution of Insurance Covers Nanotechnology risks are covered under a wide variety of insurance covers, including product liability, workers compensation, professional liability and general liability. Establishing direct relationships and definitive conclusions between exposure to manufactured nanoparticles and health and environmental effects may take years. In the meantime, it is too soon to make broad and sweeping decisions about exclusions of nanotechnologies from policy cover because: > Exposure to the general public is still low. > The various nanotechnologies encompass a broad array of activities–without a uniform description and with very different risk characteristics. > There is significant diversification between the various nanotechnologies within most insurance portfolios, which has the effect of alleviating adverse selection among the different nanotechnologies. We at Guy Carpenter believe that insurance coverage for nanotechnology is likely to evolve in a manner similar to other changing technologies. Initially, covers for the risk are likely to mimic existing covers for product liability. Over time, the specific risks posed by nanomaterials will be studied, knowledge will grow and customized covers will be developed. We have observed similar progress with other evolving technologies. Going back to the origins of modern insurance, the first policies written were for ocean marine, reflecting the dominant form of travel and commercial transportation, which was by sea. As transportation of goods developed internally by canals and roads, inland marine policies evolved to reflect the newer and different risks posed by inland transportation. The final result is a wide variety of covers in the inland marine field, many of which––like “Accounts Receivable” and “Electronic Data Processing”––have a tenuous relationship to transportation by water. We envision cover for nanotechnology to evolve in three stages. Stage I: The Early Study Period

This stage is currently underway. It is characterized by continued cover under existing policies and efforts by insurers and reinsurers to become more familiar with the special risks posed by nanotechnology. The scarcity of data about nanotechnology makes it a challenge to anticipate and respond to its risks. To address this problem, the federal government is funding research into this technology's environmental, health and safety (EHS) impact. The National Nanotechnology Initiative, created by 24 federal agencies, has a 2006 budget of more than $1 billion earmarked for nanotechnology research and development. Those agencies most heavily involved in researching the EHS properties of nanomaterials are the Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA) and the National Institutes of Health (NIH). The three major objectives of this federally funded research are: > to expand the scope of information on the behavior of nanomaterials. > to develop instruments that can measure and test nanomaterials and monitor exposure. > to assess the safety of nanomaterials across all areas of usage.

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Likely Evolution of Insurance Covers: Stage II: The Fear Phase

Concurrent with government research, insurers are gathering information about businesses that produce, use, store or dispose of nanomaterials and/or products containing nanomaterials. In particular, the industry is assessing potential property damage, bodily injury to workers and the public and the environmental liabilities associated with businesses handling and using nanomaterials. Stage II: The Fear Phase

In this stage, insurers and reinsurers begin to harbor fears that the nanotechnology risk may be higher than earlier estimated. Scary media stories give rise to doubts among CEOs of insurance companies. Insurers and reinsurers begin to look at reducing cover, and pressure develops to restrict risk transfer by the use of sub-limits and “claims-made” covers. Given what we currently know about nanotechnology risks, the fear stage is likely to be mild. While studies of the long-term health impacts of nanomaterial exposure are in their infancy, so far there have been no smoking guns or evidence of mass health deterioration as, for example, experienced with toxic substances like asbestos or lead.

If the private market fails: While not our basic scenario, there is a definite possibility that the fear stage will result in some withdrawal by insurers and reinsurers from nanotechnology covers. Given the importance of nanotechnology to the forward growth of developed economies, we are likely to see governments propose various solutions to problems of lack of availability of insurance. Po o l S o l u t i o n s

State-run pools may play an important role in ensuring the availability of coverage during this period. Such pools can assume the most volatile aspects of writing nanotechnology-related business by mutualizing and balancing the funding of exposures across all constituencies and thus enabling insurers to provide a lower-cost product to clients. Government Support

Until such time as the associated risks can be quantified, the government may act as a backstop to limit the liability of those industries that design or use nanotechnology-driven products or processes. One example of how the government can provide this type of support is the U.S. Congress's 1957 enactment of the Price-Anderson Act, which limits the nuclear industry's liability in the event of a nuclear accident in the United States. Under the Act, each utility is required to maintain the maximum amount of coverage available from the private insurance industry, which is currently $200 million per reactor. Above that amount, the Act establishes two insurance tiers. The first, which is funded by requiring each nuclear operator to pay up to $88 million for each reactor it operates, is triggered if claims following a nuclear accident exceed the coverage provided by private insurers. If this first insurance tier is depleted, any additional claims are covered by the federal government. In order to accept the unknown risks of nanotechnology, it may be necessary for insurers to establish a no-fault system in which the industry funds the first layer of insurance according to a predetermined scheme, and any claims above that amount would be covered by the federal government

Likely Evolution of Insurance Covers: Stage III: The Mature Phase

Stage III: The Mature Phase

In this stage, customized solutions are likely to be available at reasonable rates in both the insurance and reinsurance markets. Insurers will know, with more precision, the types of losses that this new technology can produce and how frequent and severe these losses might be. When these risk components can be more accurately determined, insurers can better predict future losses and calculate an appropriate premium. At this point, standard forms specific to the new exposures can be developed. We would envisage three separate forms of cover in this mature phase: > Covers designed around legislation, in a manner similar to some Environmental Impairment Liability policies. > Standalone cover, similar to Employee Practices Liability Insurance (EPLI). > Covers integrated into standard policies.

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Conclusion

Conclusion As is the case with most emerging areas of risk, nanotechnology challenges us with many unknowns. These challenges are further complicated by the fact that few risk-related forecasts have been scientifically confirmed. Many industries are extremely optimistic about the opportunities associated with nanotechnology. If they are not currently exploring its potential, they are likely to do so in the very near future. Because insurers play such a critical part in enabling new and beneficial technologies, it is critical that they work together with manufacturers, the government, scientists and regulatory agencies to identify and quantify nanotechnology's risks. Public response to this new technology, as well as the legal climate, will depend upon how much accurate information is available. We at Guy Carpenter believe that managing the unknowns associated with the development and use of nanotechnology will not be much different from gauging the risks involved with environmental liability (EL) or employee practices liability (EPL). Standard, affordable coverage will eventually be available. In the meantime, by using claims-made forms and setting appropriate deductibles and limits that are commensurate with unknown risks, insurers can mitigate their potential losses and still participate in this exciting new market.

NANOTECHNOLOGY SECTOR APPLICATIONS

Automotive

Chemical

Fillers for paints; composite materials; Lightweight construction; catalysts and painting; impregnation of papers; adhesives; tires; sensors; windshield and body coatings magnetic fluids Construction

Cosmetics

Materials; insulation; flame retardants; surface coatings; mortar

Sunscreen; lipsticks; skin creams; toothpaste

Electronics

Displays; data memory; laser diodes; fiber optics; optical switches; filters; conductive and antistatic coatings Engineering

Energy

Lighting; fuel cells; solar cells; batteries; capacitors Environmental

Protective coatings for tools and machines; lubricant-free bearings

Environmental monitoring; soil and ground water remediation; toxic exposure sensors; fuel changing catalysts; green chemistry

Food and Drink

Household

Packaging; storage life sensors; additives; juice clarifiers

Ceramic coatings for irons; odor removers; cleaners for glass, ceramics and metals

Medicine

Sports

Drug delivery systems; contrast medium; rapid Ski wax; tennis rackets; golf clubs; tennis balls; testing systems; prostheses and implants; antifouling coatings for boats; antifogging antimicrobial agents; in-body diagnostic systems coatings for glasses and goggles Textiles

Surface coatings; “smart” clothes (anti-wrinkle, stain resistant, temperature controlled)

Warfare

Neutralization materials for chemical weapons

Source: Analysis of Nanotechnology from an Industrial Ecology Perspective Part I: Inventory & Evaluation of Life Cycle Assessments of Nanotechnologies.

Selected References

Selected References Allianz Group. 2005. “Small Sizes That Matter: Opportunities and Risks of Nanotechnologies.” Allianz AG: Munich. Amall, A.H. 2003. “Future Technologies, Today's Choices.” Greenpeace Environmental Trust: London. Harris, P. 1999. “Carbon Nanotubes and Related Structures.” Cambridge University Press. Kingdollar, C. 2005. “Hazardous Times® – Nanotechnology – Will Minute Items Have a Huge Impact on the P/C Industry?” General Re Corporation. Lekas, D. 2005. “Analysis of Nanotechnology from an Industrial Ecology Perspective Part I: Inventory & Evaluation of Life Cycle Assessments of Nanotechnologies.” Masciangioli, T. and Wei-Xian Zhang. 2003. “Environmental Technologies at the Nanoscale.” Environmental Science & Technology. Munich Re Group. 2002. “Nanotechnology: What Is In Store for Us?” Münchener Rückversicherungs-Gesellschaft AG: Munich. Nanobusiness Alliance. 2006. “Nanotechnology EH&S: A Roadmap for Responsible Innovation.” National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention. 2005. “Approaches to Safe Nanotechnology: An Information Exchange with NIOSH.” Roco, Mihail, and W.S. Bainbridge, Editors. 2003. “Nanotechnology: Societal Implications Maximizing Benefit for Humanity.” Report of the National Nanotechnology Initiative Workshop. Arlington, Virginia: National Science Foundation. Swiss Re. 2004. “Nanotechnology: Small Matters, Many Uknowns.” Swiss Reinsurance Company: Zurich. U.S. Environmental Protection Agency. 2005. “External Review Draft of Nanotechnology White Paper.”

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Questions or comments regarding this report should be addressed to the authors, who are dedicated to addressing emerging nanotechnology issues. Andrew Marcell Managing Director Worldwide Casualty Specialty Practice Leader Guy Carpenter & Company, Inc. 917.937.3171 [email protected] Harrison Oellrich Managing Director Worldwide Cyber, Technology and Intellectual Property Practice Leader Guy Carpenter & Company, Inc. 917.937.3199 [email protected] Sandy Hauserman Senior Vice President Worldwide Environmental Specialty Practice Leader Guy Carpenter & Company, Inc. 917.937.3126 [email protected]

Guy Carpenter & Company, Inc. is the world's leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies, Inc. Guy Carpenter creates and executes reinsurance and risk management solutions for clients worldwide through 2,600 professionals across the globe. The firm's full breadth of services includes 16 centers of excellence in Accident & Health, Agriculture, Alternative Risk Transfer, Environmental, General Casualty, Investment Banking*, Life & Annuity, Marine & Energy, Professional Liability, Program Manager Solutions, Property, Retrocessional, Structured Risk, Surety, Terror Risk, and Workers Compensation. In addition, Guy Carpenter's Instrat® unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm's clients more successful. Guy Carpenter's website address is www.guycarp.com. *Securities or investments, as applicable, are offered in the (i) United States through MMC Securities Corp., a US registered broker-dealer and member NASD/SIPC, and (ii) European Union through Marsh Advanced Risk Solutions Ltd. ("MARS Ltd."), regulated by the Financial Services Authority for the conduct of investment business in the United Kingdom, Reinsurance products are placed through qualified affiliates of Guy Carpenter. MMC Securities Corp. and MARS Ltd. are affiliates of Guy Carpenter. Guy Carpenter & Company, Inc. provides this report for general information only. The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy, and it should be understood to be general insurance/reinsurance information only. Guy Carpenter & Company, Inc. makes no representations or warranties, express or implied. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Please consult your insurance/ reinsurance advisors with respect to individual coverage issues. Readers are cautioned not to place undue reliance on any historical, current or forward-looking statements. Guy Carpenter & Company, Inc. undertakes no obligation to update or revise publicly any historical, current or forward-looking statements, whether as a result of new information, research, future events or otherwise. Statements concerning tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants, and may not be relied upon as tax, accounting, legal or regulatory advice, which we are not authorized to provide. All such matters should be reviewed with your own qualified advisors in these areas. This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Guy Carpenter & Company, Inc., except that clients of Guy Carpenter & Company, Inc. need not obtain such permission when using this report for their internal purposes. The trademarks and service marks contained herein are the property of their respective owners.

M1689.07.2006.2M

Nanotechnology: The Plastics of the 21st Century?

© 2006 Guy Carpenter & Company, Inc.