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by Tom Lowe
May 25, 2000
We can learn much about the dangers of genetically-modified foods from the insurers
Now that genetic material from GM crops has been found in supposedly non-GM foods made from crops raised on adjacent lands, it is increasingly apparent that our choice of whether or not to eat foods contaminated by GM crops is vanishing rapidly. The reason for this is equally apparent: the manufacture and sale of GM seeds are potentially the most profitable business in the world. Protected by intellectual property laws gone wild, the highly concentrated seed and agricultural chemical business can force its products upon farmers the world over at whatever price it sets, giving it literally the power of life and death over most of the world population.
In the U.S., this invasion slipped into our farms and thus into our food completely under the radar screen of public knowledge and meaningful government oversight. We have been assured by the industry and the administration that GM foods are no different from traditional foods, just better, but there has been no testing and evaluation of the effects of this radical new technology commensurate with its possible health and environmental repercussions.
The story is remniscent of the history of nuclear power in the 1950s. The promise of limitless profits from the construction and operation of nuclear electric generation plants was sufficient to quell all doubts about the long-term safety and reliability of nuclear power, as well as the entirely predictable problem of long-term disposal of nuclear waste. The insurance companies, however, were under no illusion; they refused to insure the nuclear power industry for liability. The risks of nuclear power could not be measured by previous actuarial experience and no one was anxious for the industry to acquire the type of experience that would enable it to insure such risks.
Thus the Federal Government stepped in and limited the risk of the industry, both by statute and by assuming the risk of loss on behalf of the taxpayers. Henceforth, the nuclear power industry would not be responsible for damages over a certain amount and the taxpayers would be the ultimate insurer of liability losses.
The risks of introducing the products of genetic engineering into people's bodies or into the environment are currently unknown. Like nuclear energy, this is something totally new. The genetic revolution could benefit the lives of everyone on the planet or could devastate nature--and thus humanity--by disrupting the ecosystem upon which humanity depends for its existence.
In the U.S., liability for negligence usually rests upon three factors (1) the probability of loss; (2) the gravity of the resulting injury, if the loss occurs; (3) the burden of adequate precautions. Learned Hand, in U.S. vs. Carroll Towing, 159 F.2d 169 (2d Cir. 1947), summed the matter up algebraically: "if the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P", i.e., whether B < PL. Hand's inequality formula has little logical basis, but it illustrates the importance of both the probability of a loss occuring and the amount of the loss, a figure often termed the "net expected value."
The problem with genetic engineering is that we really have no reasonable estimate for P, the probability of loss, or L, the gravity of the resulting injury. For example, scientists have discovered recently that the pollen from corn genetically modified to produce the bacillus thuringiensis toxin is killing the larvae of monarch butterflies. Corn is wind pollinated, and the pollen can fall as much as 60 yards from the pollen-producing plants. The monarch larva feeds upon milkweed, which grows in the U.S. corn belt. When the pollen was dusted by scientists on the leaves of the milkweed, roughly half of the larvae eating the milkweed died.
Before the article in Nature Magazine, published in May, 1999, revealed the danger to the monarch butterfly, how could P, the probability of loss, be calculated? Moreover, how do we measure L, the monetary value of the loss, in the case of the monarch? And, if we could even know P and L, is there any conceivable way to take precautions other than by not using GM corn?
Because ordinarily monarch butterflies are neither bought nor sold, they have no easily ascertainable monetary value. We do not know for sure what role they play in the life processes of the biosphere and therefore we do not know what damage or disruption their extinction might bring about. When the dangers are uncertain and difficult to quantify, our usual choice, when there is money to be made, is to treat the possible damages as highly speculative or nonexistent and plow ahead, which is what happened in the 90s when the GM food industry started introducing GM products in U.S. supermarkets.
Now the liability insurers are having second thoughts about assuming the kind of risks that GM foods represent.
Swiss Re, a large reinsurer, has provided a monograph on the problems of insuring risks arising out of genetic engineering that is available on the Worldwide Web at: http://www.swissre.com/e/publications/publications/flyers1/genetic.html.
The company is quite frank:
Developments in genetic engineering are changing the risk profiles of the pharmaceuticals, agricultural and nutritional sectors permanently. Genetic engineering has triggered a worldwide discussion on public acceptance, which will not leave the insurance industry unaffected. When assessing the future risk profile, the decisive element is not whether genetic engineering is dangerous, but how dangerous it is perceived to be. Industry and insurance share the responsibility of helping to shape society's changing values. (Page 1)
Swiss Re's position is that an industry's, and therefore its insurer's, exposure to liability is determined by societal values. Indeed, legal liability is often determined by whether a product, procedure or service is "unreasonably dangerous," the precise meaning and application of which is left to a jury to determine.
In the case of many products, insurers have sufficient experience with lawsuits to accurately estimate the practical meaning of the term and its impact upon their insureds. On the other hand, damage to the ecosystem by, for instance, killing off half the monarch butterfly population, might not even give rise to a substantial cause of action for even a single plaintiff under current tort law. Public perception and perhaps fear of the possible environmental repercussions, however, could change that situation rapidly, by influencing both legislation and the course of judicial decisions. What starts as a very small risk on the part of the insurer could rapidly grow to proportions that threaten the solvency of very large insurance companies who assumed the risk based on the original perception.
So what is Swiss Re's recommendation?
The socio-political discussion centring on genetic engineering has so far been dominated by risk conflicts. The genetic engineering discussion therefore often focuses on the area of sensitising risk perception. Its basis is however an ideological conflict of goals, or conflict which is dictated by different interests. Fundamental questions on the development and structure are under debate. This puts genetic engineering in the area of conflict between risk and ethics, a situation in which hardly any other modern technology finds itself.
Successful companies are trying to support their corporate objectives by means of value management. They identify the importance placed on the different values of a pluralistic society, and what effect these values have on a company. Where no consensus can be reached, for example on how to deal with genetic engineering, they look to find a balance of interests and make a constructive contribution. The prerequisite for this is that basic questions are asked and the different interests are made public.
The constant conflict of goals inherent to a society of pluralistic values can paralyse development, not least if no adequate, long-term insurance cover is available. The insurance industry is therefore seeking dialogue with clients and those affected on the subject of genetic engineering. Risk-related information must be exchanged openly and differing values taken seriously.
A development of societal and legal frameworks unfavourable to genetic engineering could lead to insupportably high liability risks which cannot be carried by either the genetic engineering industry or the insurance industry alone. Despite differing motives, both industries hold joint responsibility for helping to shape the change in societal values. (Page 12)
Exactly what is Swiss Re saying here? First, successful companies have used a tool called "value management" to support their corporate objectives. Value management, according to the monograph, is a process by which corporations analyze the various interests of a pluralistic society and, in the case of genetic engineering, look "to find a balance of interests and make a constructive contribution." The process, it would seem, is in the nature of a dialogue between the industry, the insurance companies and the parties affected. The last sentence of the quotation above, however, makes it clear that the result of value management is to "shape the change in societal values" obviously in the direction of public acceptance of systemic risk from genetically-engineered products. Put more crudely, the company is saying that the public will need to be propagandized sufficiently to accept the risk of GM foods without question.
If society can be convinced that genetically-engineered foods are generally safe and that the benefits to be gained far outweigh the dangers, then insurers can offer coverage "for genetic engineering risks for as long as individual companies have to compensate for individual losses. It must not be a task of the insurance company, however, to satisfy claims which stem for a change in societal values. This risk is the manufacturers' business risk." (Page 7)
Thus, for many years, tobacco companies enjoyed virtual immunity from civil lawsuits arising out of the dangers of tobacco use and it was only when public perception changed to regard cigarettes as an unreasonable risk did they become vulnerable. Insurance companies insured risks such as defective manufacturing, but not the general risk of liability presented by the recent lawsuits with verdicts and settlements in the hundreds of billions of dollars.
Swiss Re sees the problem as one of perception of risk, rather than actual risk.
Missing from the discussion is a moral question: when the probability as well as the nature and magnitude of the possible losses from genetic engineering are unknown should any risk at all be imposed upon the public and the ecosystem without extensive public debate? We know from bitter experience that some scientists will say whatever their paymasters order them to say and that the corporate leadership of our nation, when faced with a choice between profits and the public welfare will invariably choose the former. We simply cannot trust them to either speak the truth or act in the public interest. So why should we trust the food they make to be safe for humans and benign to the environment?
There is no reason to trust them. That is why the issue of GM foods will not go away and that is why insurance companies, such as Swiss Re, will continue to balk at insuring companies that produce GM organisms.
Copyright 2000, Thomas Lowe. All rights reserved. Published in The Jackson Progressive,
http://www.jacksonprogressive.com. Noncommercial reproduction and republication of this article in its entirety is authorized, provided that this notice accompanies any such reproduction or republication.