Advancements in hyperloop technology are moving ahead at full throttle. As a leader in this space, Virgin Hyperloop Oneused the summer to test the speed of its pods on a track in Las Vegas. Meanwhile in Canada, Toronto-based hyperloop company TransPod has proposed building a line between Montreal and Toronto, cutting down travel time between the two metropolises to just 39 minutes.
The implementation of the technology, which involves pods travelling at near-supersonic speeds inside tubes, is likely a few years away, but as progress on hyperloop moves forward, the insurance industry will have to consider how to cover it, starting from the ground up.
“How do companies that are focusing on hyperloop get this technology into usage? Really, it has got to be part of a regional, municipal or national infrastructure plan. It can either be funded or approved through a P3 – a public-private partnership consortium that can actually bring such a large project through from planning to construction” said Angelique Magi, national vice-president of ttransportation and strategic initiatives for The Guarantee Company of North America.
A construction project, even one that involves hyperloop, would involve the typically known large infrastructure risks, which would in turn necessitate surety bonding as the line is being constructed, much like you would have with a project to build a subway or highway that would also have contractual time and budgetary constraints.
“You potentially also have E&O exposure on the technology design, the architecture of the actual physical infrastructure that’s being built for it, and then any kind of [issue] that could fall out from that,” added Magi.
Once the technology is up and running, cyber risk comes into play. An important consideration would be if the technology can be hacked and what would happen hyperloop network be targeted by cyberattack. Especially as public entities continue to be targeted by hackers, with a town in Ontario recently becoming a victim of ransomware, this threat is increasingly a reality.
The well-being of the precious cargo inside the pods will also be a major concern.
“There’s an entirely different duty of care required when you’re moving people versus moving things,” explained Magi. “Whether it’s air, rail or by bus, you have passenger hazard exposures. For each individual, there would likely need to be a specific liability limit should a person become injured while they are entering, exiting, or on the actual pods within the inner workings of the loop. Plus, we haven’t tested this on human beings yet, so what impact does the continual usage of hyperloop do to the human body?”
On the cargo side, the rapid movement of goods would help fuel the economy and put us on a path towards a greener way of doing business, added Magi. Yet, for an industry that relies on historical losses and data, insuring infrastructure that’s never been seen before and breaks the mold of standard transportation methods brings its own set of challenges.
“It’s one of those very interesting cross-sections: it is disruptive technology and also an evolutionary technology of transportation methods we currently work with every day. Conceptually, you look at the benefits and it makes perfect sense,” said Magi.
“To be on the cutting edge of hyperloop as not only a new technology, but a new exposure for the insurance industry, we really need to have underwriters, risk managers and claims professionals that actually understand and want to learn the impact of the technology. Generationally, we need to get ahead of the technology learning curve fast whether it’s from a product development or from an underwriting perspective to understand the fundamentals of the technology and its intent, both from a commercial perspective and also a societal perspective.”
