« Electrosmog »

1. «Electrosmog» Why are electromagnetic fields (EMF) on the radar screen of insurance companies for more than a decade? Insurance in a nutshell Swiss Re’s approach EMF from an (re)insurance perspective Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

2. Starting point • EMF has become an issue in the US since a 1979 study had pointed to a link between childhood leukaemia and proximity of high voltage power lines to children’s home. • Subsequent epidemiological studies try to establish links between EMF and a variety of health problems, including childhood leukaemia. Results are often contradictory. Final results/interpretation of the INTERPHONE study are desperately awaited. • Prim target of EMF related claims are the utility industry and the mobile phone industry. • The insurance industry is financially burdened with costs of litigation. Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

3. Prerequisite of insurability Transparency • Risk / loss mechanistic has to be understood Probability • Claims shall follow a stochastic process Quantifiability • Potential monetary losses have to be predictable • The law of the large numberProblem: Statistics are retrospective • Accumulation of losses has to be quantifiable Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

4. Liability insurance Line of business CGL Commercial (comprehensive) general liability • Insurance which protects insured companies against third party claims for bodily injury and property damage caused by the company's business operations, premises and products.CGL can include environmental impairment liability (EIL), but strictly linked to accidental events only. PL Product liability • Liability of the manufacturer for damage caused by the use of defective products produced and /or supplied by him. Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

5. Functions of the liability insurer • Compensation of legal liability claims eg bodily injuries, property damage, environmental damage • Defence against causeless, false or fraudulent suits • Representation of insured • Claims handling LiabilityInsurer No legal relationship Coverage Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services Policyholder Claimant Liability

6. Mechanism of insurance/reinsurance Policyholders level Company A Company B Company C Company D Company E Company F Accumulation of exposure Insurers level Insurer A Insurer B Insurer C Reinsurance level Reinsurer

7. Mechanism of insurance/reinsurance Policyholders level Company A 500k Company B 500k Company C 500k Company D 500k Company E 500k Company F 500k Accumulation of exposure Insurers level Insurer A 750k Insurer B 250k Insurer C 500k Reinsurance level Reinsurer 1.5 m Underlying assumption: Insurer share: 50 % Reinsurer share: 50 %

8. Swiss Re’s approachGroup Emerging Risk Framework Triage Review & assignments Validation & assignments Implementing measures, monitoring & controlling Perception (Internal & external network) Identification (SONAR officers, ERM) Assessment (Risk experts) Evaluation (Risk experts, eg EC EMRI) Implementation (Global Functions) Individual Watchlist Group Watchlist Underlying Risk report Impact Risk report Bus. measures / Progress report • Function view • Emerging risk description (function view) • Pre-assessment(function view) • Group view • Emerging risk description (Group view) • Pre-assessment(Group view) • Understanding • the risk • In-depth risk analysis • Technical / scientific report on specific risk • Evaluation of • impact on • Insurance risk • Credit & financial market risk • Operational risk • Risk comms • Risk awareness& stakeh. dialogue • Downside risk mgmt • Risk mitigation • Business develop. • Risk talking

9. Previous Swiss Re publication“Electrosmog – a phantom risk” The EMF problem is composed of three sub-problems: • Scientific/technical/medical problemHow do EMF’s affect the human organism • Socio-legal problemHow shall society deal with technologies which may represent a hazard • Underwriting problemHow shall insurance deal with such “phantom” risks (Google: Swiss Re, Electrosmog) Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

10. EMF from an underwriter’s perspective In general required • Solid knowledge of loss frequency and loss severity • However, EMF like other “emerging risks” is different: • Neither loss frequency nor loss severity are known • Technological development is hard to predict • Legal environment may change • Development of societal acceptance is uncertain • Potential for catastrophic losses exists (Especially on reinsurers’ side due to accumulation effects) Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

11. EMF claims aspectsEMF vs Asbestos Similarities • Cause of the concern is everywhere • Fear of what might happen in the future is predominant over facts (concern over actual injuries) • Public awareness of the issue very high • Large loss potential (individual losses as well as accumulation of losses) Dissimilarities • EMF is not proven to be harmful • No loss mechanism is known (cause-effect relation) Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

12. EMF claims aspects Factors influencing EMF claims (especially when jurors are involved) • General fear of the unknown, blended with the fear of the invisible, uncontrollable • General medical fears “All things are poison and nothing is without poison, only the dose permits something not to be poisonous” (Paracelsus) • Perceptions of the industry as such (utilities, mobile phone producers) • Funding of EMF studies (mainly industry) • Lack of unambiguous scientific evidence, blended with the complexity of the issue Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

13. Swiss Re’s conclusion • Based on common sense, it can be stated that adverse health effects caused by weak EMF – if there are any at all – are expected to be slight. Still, … • We continue to closely monitor the scientific/technological progress as well as the legal development. And, … • Whatever scientists say, public perception whether EMF causes disease or not is what really matters. • Swiss Re controls/limits its EMF exposure by adequate underwriting measures (Implement U/W best practice) Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

14. Summary • Rapid growth and widespread use of wireless technology increases the exposure to EMF  eg pervasive computing using RFID technology • Numerous scientific projects are currently running to evaluate effects of weak EMF exposure to biological system. • If a cause-effect relationship could be established, EMF might have the potential for a large loss accumulation (analogy to asbestos). • The public awareness on risks associated with EMF is steadily growing. Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

15. Last but not least Mobile phones can be hazardous • 25 people killed and 130 injured at train crash in California. Train engineer was distracted by intensive use of the mobile phone. • Mobile phone causes skin rash. An allergic reaction to nickel on the handset was identified as cause. • Health risk: Mobile phones in hospitals were found to be contaminated by dangerous bacteria's which could carry on diseases. • Recall of cell phone batteries: The batteries are not short-circuit proof and may overheat and pose burn hazard to consumers. Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services

16. Questions? The Microwave Sky Felix Staub «Electrosmog» 21 Dec 2009 Risk Engineering Services Picture NASA/WMAP Science Team