Innovation, Insurability and Sustainable Development: Sharing Risk Management between Insurers and the State

Both the public and the private sectors have responsibilities for managing the risks associated with new technologies. This article is about the interplay between three key concepts: the insurability of risk; innovation; and the broader framework of sustainable development. It is based on the recent EU INTEREST project which addressed the role the insurance sector and insurance-based mechanisms might play in relation to innovation which promotes, or challenges, sustainable development. The project cast light on three issues: opportunities for promoting sustainable development through innovation by adjusting or sharing the responsibilities of private sector actors, regulators and policymakers; promoting sustainable development innovation by using risk management mechanisms from insurance in other domains or by the insurance sector using a wider set of tools to manage novel risks; and policy options for the complementary use of insurance-related and other risk management mechanisms. The article begins by considering, at a general level, the interplay between insurability, innovation and sustainability, before moving on to consider five specific contemporary case studies: the development of GM crops; the risks associated with xenotransplantation; nuclear power; the tapping of freshwater submarine springs in the Mediterranean area; and the management of flood risks. The paper then draws out broader conclusions about the use of risk management mechanisms to promote sustainable development innovation. It concludes by considering implications for policymakers and insurers.