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Insurance pitfalls of 3D printing

At a glance

  • Businesses who adopt technology may not be aware of increased risks associated with 3D printing
  • SMEs may be particularly vulnerable
  • Risks include worker and public injury claims, increased fire exposure, intellectual property infringements and product liability issues

The fast-evolving technology of 3D printing may soon be able to offer firms endless new business opportunities.

However, many people are unaware that by merely employing one of these machines you may well be drastically altering the risk exposure of a business.

Early adopters of 3D printing

  • Manufacturers, including those involved in the design and prototyping process
  • Retailers in terms of customisation
  • The medical arena with prosthetics and replacement body parts
  • Small businesses and ‘bedroom manufacturers’

Using a 3D printer for business purposes could trigger a rise in worker and public injury claims, increased fire exposure from the heat generated by a 3D printer, as well as added risks around intellectual property infringements, product liability and design and data theft.

If an insurer or broker is unaware that a customer is actually operating a 3D printer, then a firm may not be covered in areas they otherwise thought they would be and insurance premiums are likely to be incorrect.

A shift in an operating model of a business can cause it to deviate away from or expand upon its original purpose when initially insured. This deviation or expansion is known as business operating drift.

“Business operating drift is such a danger for firms who look to utilise 3D printing given how it could change the dynamics of their business,” said Alexander Young, part of the Proposition Development team at Zurich.

And it is the smaller companies that are possibly more likely to fall into this trap. Inspections are less frequent at SMEs and the broker or insurer may not pick up on the use of 3D printers for some time.

“It is a serious concern for Zurich,” said Janina Brown, part of the Research & Insight team at Zurich. “Some SMEs may not have the knowledge or understanding of how their risks and exposures could change with the introduction of 3D printing to their business and therefore would fail to appreciate that additional cover may be required.”

3D stat

For instance, an SME retailer who uses 3D printing to make some customised items may look for a straightforward retail insurance package without fully appreciating the additional risks of offering 3D printed customised items andhaving a 3D printer on site.

Growing industry

But despite the media hype, 3D printers are still only really being used by niche audiences which include the high-precision aerospace industry, automotive industry and, on a smaller scale, hobbyists, jewellery makers and toy designers.

3D printing is also used by many manufacturers for prototyping and a huge amount of research is being conducted into their suitability within the medical arena – with personalised 3D hearing aids already available on the high street.

Currently, 3D printers largely churn out mainly plastic and metal objects. However, the business world is slowly waking up to this 3D printing revolution that could eventually foster a paradigm shift in the entire supply chain.

With reduced inventory, no requirement to order in bulk, little or no storage costs and a way to personalise and differentiate products from the opposition, it is obvious why many businesses are seriously considering 3D printing as a technology. The sector is likely to be worth around £4 billion by 2019.

For companies already using 3D printing, or additive manufacturing to give it its full title, it is vital that a broker understands exactly how a firm uses the technology so as to offer the correct insurance cover.

Business operation drift is such a danger for firms who look to utilise 3D printing given how 3D printing could change the dynamics of their business

Alexander Young, Proposition Development Team, Zurich

“There isn’t a one-size-fits-all for 3D printing insurance,” said Janina. “The risks and exposures a customer will face will depend on how that customer operates; for instance, what it does and how it utilises 3D printing.

“Let’s say, for example, we have two retail companies that have decided to offer customised items made by a 3D printer. Company A has 3D printers on site to produce these items while Company B has outsourced this customisation to an external supplier.

“Whilst they essentially provide the same offering, their risks and exposures will obviously differ from one to the other.”

Image © Getty

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