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High tech, high risk? Property/casualty insurers look at emerging technologies not for their typical uses, but for hidden abuses--and potential exposures.

To keep up with an ever-changing world, the property/casualty insurance industry must be alert to risks from new and unlikely sources. No development affecting coverage is too big--or too small--to escape our notice.

Who pays when a federal law extends daylight-saving-time, and suddenly computers that run everything from elevators to heating boilers must be reprogrammed? And whose coverage is exposed if terrorists use electromagnetic pulse devices to disable thousands of circuit boards, affecting everything from traffic signals to airport control towers?

Privacy issues are at the center of one category of emerging insurance issues. Technology has transformed our lives in many beneficial ways, but society--and lawyers specializing in class-action suits--have focused on potential privacy violations.

Event data recorders in newer autos can collect accident-related information with remarkable precision, including a change in vehicle velocity and when brakes were applied. In combination with global positioning devices and transmitters, these EDRs also can record where and when the car was driven.

But even as manufacturers are moving to standardize EDR-collected data, carriers' ability to retrieve EDR information from policyholders is in question. Some states have passed laws limiting insurers' ability to acquire EDR data from vehicle owners at the time of an accident.

Further privacy concerns will emerge with the introduction of intelligent transportation systems technology in autos and on roadways. Such "intelligent vehicles" of the future will be equipped with ITS cameras, more advanced computers, and geopositioning systems and transmitters. Cross-vehicle communication will help prevent accidents, save lives and even ease traffic congestion.

This intelligent-vehicle technology allows cars to communicate with each other to avoid collisions. An onboard display screen will warn of approaching intersections and stop signs, and if a vehicle is drifting out of its lane. The systems can even provide braking and steering assistance. The events recorded through this technology, which may not be fully in place until the 2010s, can also be saved in EDRs.

Invasion of privacy is a concern also arising with the use of radio frequency identification, or RFID tags. RFID technology identifies a car as it goes through EZ-Pass or other automated toll-collection devices. RFIDs are used to track prison inmates and monitor identity badges and credit cards.

RFID tags affixed to products remain functional even after those products have been purchased and taken home. A shopper might not necessarily be aware of the tag or be able to remove it; thus, it's possible RFIDs can be used for surveillance and other nefarious purposes.

Proponents of RFID technology are advocating everything from RFID use in passports to driver's licenses. One manufacturer has proposed its RFID-enabled identity microchip's "unique under-the-skin format" as a means of identifying fraud, securing buildings, safeguarding medical records and thwarting kidnappers. But because some RFIDs broadcast a weak radio signal, does this constitute a publication that violates a person's right to privacy?

Identity theft is a major concern for individuals and could threaten businesses, too. Unintended posting of personally identifiable information on the Internet could violate an individual's right to privacy. Courts may not consider electronic data tangible property, but if data is stolen to acquire tangible property illegally--as when a hacker obtains a credit card number to buy an airline ticket--a business might be found liable for the cost of the stolen plane ticket because of its negligence in preventing the data theft.

Health and nutrition present another array of new issues. Can businesses be found responsible for contributing to obesity? And who pays when genetically modified crop pollen finds its way into organic crops? Effects from cell phone use, avian flu and even bedbugs are but a few of the new potential health issues the industry faces.

Only by remaining vigilant and proactive in addressing ever-changing exposures can we be prepared to address emerging industry challenges and find new solutions.

Frank J. Coyne, a Best's Review columnist, is chairman, president and chief executive officer of ISO. He can be reached at
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Title Annotation:Property/Casualty: Underwriting Insight
Comment:High tech, high risk? Property/casualty insurers look at emerging technologies not for their typical uses, but for hidden abuses--and potential exposures.(Property/Casualty: Underwriting Insight)
Author:Coyne, Frank J.
Publication:Best's Review
Geographic Code:1USA
Date:Jul 1, 2006
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