Beyond Words

Access to affordable housing, or lack thereof, is one of the socioeconomic factors affecting the health of people living in poverty.

Building new homes in impoverished communities is expensive and labor intensive, but 3-D printing may be on the verge of offering a plausible solution to this problem. This new technology, also called additive manufacturing (or AM), is enabling businesses to print homes for less than $4,000 and within 24 hours of breaking ground. (The 3-D printer actually prints and layers mortar, over and over on top of itself, to create walls.) The 3-D printing company Icon has pared with New Story, a nonprofit, to print an entire community in El Salvador to combat homelessness and poor living conditions.

Houses are just one of many products now being developed using 3-D printing. Others include artificial coral reefs, limb prosthetics, and antique car parts. The cost effectiveness and personalized service possible with additive manufacturing help drive its appeal.

Global spending on 3-D printers is projected to rise from almost $14 billion in 2019 to over $22 billion by 2022, according to International Data Corporation. These figures include the expenses for hardware, materials, software and services for 3-D printers. Discrete manufacturing alone makes up almost 54% of the market share for 3-D printers. Healthcare providers and education together make up about 22% of the market share.

But like any new technology, additive manufacturing brings its own set of risks for businesses. There are many variables that come with additive manufacturing, such as the 3-D printer itself, the 3-D design, the 3-D printing material, and the safety of the entire process.

Ben Beauvais, an executive vice president and chief underwriting officer at Liberty Mutual Insurance, says there are many stages to 3-D print manufacturing. Beauvais says the end goal of AM is to produce, but a lot of underwriting considerations need to be taken into account. These include risk management protocol, safety standards, labeling and typical considerations for product liability.

While all these components and stages in 3-D printing are complicated, providing coverage for this technology is just an extension of the basic insurance model in the manufacturing industry. “The downstream risk can be somewhat more dynamic, given the shifting liability of the manufacturers relative to how they are sourcing their products and the contractual relationships that exist,” Beauvais says.

Varying Quality

One of the challenges of issuing coverage in additive manufacturing is the lack of industry standards and the abundance of materials to print with. A business could have a top-of-the-line printer, but if it’s not filled with the right printing material or if it’s using an improper blueprint, the production process could fall flat or, even worse, create a defective product.

Ruta Mikiskaite, a senior casualty treaty underwriter at Swiss Re, believes the lack of standardization within additive manufacturing has been an important topic for several years now. Part of the confusion is the speed at which 3-D printers can print various objects and how dynamic their printing jobs can become. This is just one example of a universal metric that needs to be developed. Mikiskaite says there are several marketwide initiatives to improve AM standards being undertaken by the International Organization for Standardization (ISO), American Society for Testing and Materials (ASTM), and the Additive Manufacturing Standardization Collaborative. But there is currently no global framework that could be applied to all stages of the AM process. “Standardization would help control the risks associated with AM and play a major part in controlling the quality of both the AM process and the final product,” Mikiskaite says.

Both the software used in the printer and the 3-D design itself play a large role in risk assessments. Beauvais says the hardware of a 3-D printer has a vital impact on the AM process. Taking this into account, errors and omissions coverage will likely be needed. “You have sort of the traditional engineering and design side of professional liability, but you’re also entering into the software E&O world,” he says. “Because, largely, the output of your product will be dependent on the functionality of the 3-D printer itself. There’s a lot of hardware that goes into that—whether it’s the design of the machine that prints itself or the componentry that the machine is being asked to build.”

The implications for faulty 3-D printed products could be devastating and warrant legal action. For example, if a replacement house crumbles and hurts the occupants, a printed antique car part breaks while driving, an artificial coral reef causes pollution, or a prosthetic body part causes harm to someone, the ramifications could be great.

Coverage for 3-D printed products could also vary depending on the quality of the material used. “If we talk about product liability, we care about product performance and reliability and look into the overall life cycle of the product,” Mikiskaite says. “Therefore, products that are expected to live long, for example titanium hip implants, or are used as, say, safety-critical parts, need to be certified and comply with standards. In the case of 3-D printed products, there may be initial disbelief in their reliability and therefore an uncertainty margin. Having said that, we should embrace additive manufacturing as a not-so-new and actually quite well tested technique.”

Workplace Improvements

Beyond the risks facing businesses that are manufacturing products via 3-D printing, these machines have the potential to improve the manufacturing environment, including workplace safety. “We’re seeing more customers look to our metal-printing process as a safer alternative,” says Andrew de Geofroy, a vice president of application engineering at Markforged, a 3-D printer manufacturer. “This is because they aren’t managing hazardous and flammable materials. As a result, they can keep their insurance costs down by maintaining a safer work environment for their employees.”

In addition to creating a safer work environment, additive manufacturing could also help improve the recovery process when accidents do happen. “Commercial insurance could also think of potential use of AM in managing claims,” Mikiskaite says. “Business interruption costs could be minimized if it was possible to use 3-D printed replacements for damaged property.”

This type of recovery could be especially beneficial for smaller businesses that rely on every single day of output and can’t necessarily afford the wait times or costs of replacing a broken piece through traditional methods.

Understanding The Risk

Because 3-D printing is a relatively new concept for mainstream business and it can be difficult to wrap your head around, there is an even greater need for insurance professionals to unearth and help the public understand the risks involved. Otherwise, one bad claim could turn the burgeoning field into an unpalatable risk.

“Let’s assume a hospital might be able to use 3-D printing to cut the unit cost of a key medical device component,” Beauvais says. “While there may be purchasing savings, what if poor quality with the in-house 3-D printed component led to a false reading or other outcomes that result in significant lawsuits? This is the value of bringing risk management, insurance brokers and carriers into such discussions.”

While 3-D printing is irresistible due to its low-cost benefits and aptitude for customization, there are many new dangers for this upcoming industry.

“From an insurance coverage perspective, clients and brokers need to ensure there are no gaps in coverage and the use of additive manufacturing is not excluded or inadequately limited,” Mikiskaite says. Meanwhile, she says, underwriters need to evaluate risk and ask questions about what additive manufacturing techniques and which machines are being used and for what purposes.

Learn More

Interested in learning more about additive manufacturing? These sources can help:

Markforged provides self-learning courses and documentation to teach customers and those interested about its products and general 3-D printing practices.

Formlabs is another 3-D printing company that provides articles and information on the complexities of additive manufacturing and the need for more industry standards.