The FINANCIAL -- The idea of creating something from nothing may sound like science fiction, but in industries from toys to healthcare and aviation, 3D printers, also known as additive manufacturing, are being used on a daily basis. Additive technology guru Terry Wohlers predicts the market will be worth close to $6bn by 2017, according to Lloyd's.
While 3D printing has many compelling uses, there are plenty of unknown outcomes that require insurance. These include design and intellectual property (IP) infringements and product liability risks.
“This technology is one to keep an eye on,” said Kevin Rowe, marketing development executive at Zurich. “But if it’s on your risk radar now, so much the better for when its early teething problems are overcome,” he added.
Unlike traditional manufacturing, which creates a product from breaking down raw materials, a 3D printer builds a product up from scratch layer by layer, one molecule at a time. Sophisticated computer-aided design (CAD) software tells the printer exactly how to “build” an item from the powder or gel base material that goes into it.
There are many positive aspects of additive technology, not least of which is the environmental attributes. Products can be created onsite with minimal waste, with less need to transport raw materials and items around the world.
One potential use for the technology, thinks Craig Beattie, an analyst in Celent’s insurance practice, could be to produce components in the aftermath of a major event to avoid large-scale supply chain disruption.
“2011 was an extraordinary year in terms of catastrophes and one of the things it highlighted to some companies was they were completely reliant on one manufacturer that happened to be in an industrial park in Thailand. A hard drives supplier was completely flooded out and that had a huge impact on producers of PCs and servers,” he said.
“It might be that 3D printing adds more cost to the manufacturing process, but that might be preferable to having the inventory in stock versus not having it in stock. So it could lead to greater supply chain flexibility and that could be quite interesting,” Beattie said.
However, outside of these disruptive events he does not see additive manufacturing replacing traditional manufacturing in the future. For most industries addititive manufacturing is currently not cost-effective enough to warrant doing it on a massive scale.
“Where you tend to see 3D printers used most is in the prototyping area. It’s very quick to print something based on a model to see if it works. Once you get into mass consumption there tends to be cheaper ways of doing it,” he said.
However, given the high cost of materials in the aerospace sector, this new form of manufacturing is considered an economical alternative to traditional manufacturing. Boeing, NASA and others are using 3D printed parts in their aircraft, according to Lloyd's.
“The whole excitement around additive manufacturing is that you can print any sort of shape and you can print an entire piece, which would ordinarily be quite intricate, now seamlessly,” said Ingrid Hobbs, a partner at law firm Mayer Brown.
“Apparently, Boeing is using the technology to print ducts that are curved to send cooling air into certain electronic equipment in its planes and is creating approximately 300 distinct parts using 3D printers. It’s very much cheaper for Boeing because it is not wasting any material – it is buying what it needs – the saving per part is said to be between 25% and 50%.”
3D printers are being modified for space travel, to allow astronauts to travel further into space by printing replacement parts as they need them.
With the cost of a small 3D printer as low as £850 and many CAD designs available for download on the internet, hobbyists are able to create items such as toys and chess sets at home, according to Lloyd's.
Security is another concern. Designs for the Liberator plastic pistol were downloaded over 100,000 times in the US before the government ordered a takedown fearing they could violate arms-exporting laws. Demonstrations have proved the 3D printed guns can fire bullets, according to Lloyd's.
One of the biggest challenges presented by additive manufacturing may be traceability, an important factor in passing on liability for product defects, explains Hobbs. “If you have decent contractual arrangements between parties in a supply chain, there should be clear rights of recourse against the party responsible if something goes wrong with a product produced using traditional subtractive manufacturing techniques. Whereas if you download a design from the internet for use in additive manufacturing using a 3D printer, you may not know where the design has come from or if there are any IP issues with using it.”
“There needs to be regulation in this area around the whole concept of IP rights and design. If reputable designs are loaded onto managed websites where there is some protection, that should be capable of being regulated properly and should afford the end user an opportunity to trace the designer and exercise recovery rights, provided liability can be established against the designer for product failure if something goes wrong.”
“With 3D printing there are a number of new players introduced into the matrix, but it’s still going to be the age old problem when something goes wrong of trying to find the cause and divvying up the blame,” she concludes. “Currently there’s no proposal on how that will work in practice.”