Insurers face cloning chaos

GENETICALLY engineered products may turn the insurance industry upside down, according to a report by the reinsurance giant Swiss Re.

There is "insufficient loss experience" and "no quantifiable elements" for the insurance of genetic engineering, the report, Genetic Engineering and Liability Insurance, points out.

Swiss Re, based in Zurich, casts doubt on the capacity of insurers to price risks associated with the genetic engineering industry. "Since the insurance business is to accept risks in return for premiums, it must have a clear conception of the nature and size of those risks," the report says. The key is to reach a consensus "on the relevant loss scenarios". But, it says, a solution is a long way off.

Currently, risks associated with genetic engineering are covered under general liability policies. Only a handful of markets define special cover.

"This creates the impression that many insurers treat genetic engineering as a simple continuation of industrial activity," says the report. Its author, Thomas Epprecht, says this makes it difficult to estimate the size of the market for genetically engineered products.

Public attitudes are also important. The euphoria which once spurred each advancement, "has hit a crisis", says the report; society increasingly associates scientifically complex developments with danger.

The less acceptance the public shows towards new risks, "the greater the likelihood that the possible negative consequences of each new technology will become a problem for the insurance industry," it says. The risk is that pressure for tighter legislation on genetically modified products could increase companies' liability.

Tom McDermott, public affairs director of genetic engineering firm Monsanto Europe, played down the report. He said it was worried "about the unpredictability of political and legislative developments, as opposed to risks of the technology. A product's risks depend on its properties, not the methods used to produce it."

A Lloyd's spokesman said an insurance company asked to cover the risks of genetically engineered products would work out a premium to cover them and: "It would only be after any adverse claims that the company would raise premiums or get out of the market."