Collaborative robots – or “cobots” – are a key manufacturing technology for tasks requiring human and machine cooperation and have been identified by the AGCS Trend Compass as a trend that will gain significant traction in a number of industries over the next five to seven years. What are the benefits and risks associated with increasing adoption? And how will insurance respond?
What is the AGCS Trend Compass? More than 200 AGCS managers and risk experts identified and ranked 25 important trends in terms of the impact they will have on business over the next five to 15 years. Development and growth of cobots is one of the highlighted trends.

A textile worker’s head is crushed between the primary swinging arm and a stationary component on an industrial robotic machine. A worker in an automobile plant is injured when a resting robot unexpectedly powers up and strikes him as he cleans a welding tip on a second robot, resulting in a fractured hip. A worker in a paper manufacturing plant is injured when a robot loading 100 lb. bags of flour accidently drops one on him, breaking his back and dislocating his shoulder.

These [1] are only a few examples of human accidents caused by robots which are monitored by the US Department of Labor’s Occupational Safety and Health Administration (OSHA). The numbers aren’t staggering – only 40 such incidents going back to 1987 [2]  – but even one a mishap can be devastating for workers, their families and the company.

Robots are relatively safe to use in the workplace but measures for employee welfare must be built in for robotics to become more dependable – especially as increasing numbers of them are brought into production for use in the workplace. That’s where cobots can help.

  • Cobots are used in manufacturing to work closely with humans on repetitive, painful or monotonous tasks, freeing humans for decisionmaking and other difficult to program tasks
  • The AGCS Trend Compass has identified cobots as a future trend that will be increasingly adopted across a number of industries in the next five to seven years
  • Market growth of cobots is mainly driven by increasing demand for light-to-moderate capacity cobots that are faster, cheaper and more versatile than most robots: perfect for the SME market
  • Any company implementing cobot technology should conduct a thorough risk assessment of the entire system,  the cobot, the workspace and employees; insurance can help

Collaborative robots – “cobots” – were first introduced into automobile manufacturing in the early 1990s to help reduce a disturbing trend in workers losing production time due to nagging pain caused by performing repetitive tasks like lifting heavy loads without proper support. Even today, it has been estimated that just a third of all days lost due to musculoskeletal disorders and mental illnesses still leads to €20bn ($22.4bn) in production downtime costs [3].

Amid industry cries for more ergonomic working conditions, General Motors (GM) introduced robots to work hand-in-hand with humans with each contributing what they did best. The result was robots that could fully support a load, but were dependent on the human worker to provide the motion force to move it from place to place. The cobot was born – first patented in 1999.

Cobots have steadily been deployed into the workplace since then – predominantly in the automotive and electronics sectors but increasingly in the life sciences, logistics, chemicals and pharmaceuticals, food and beverage, and other industries – even in military applications such as on the International Space Station or for bomb disposal in war zones.

“Cobots need to be both safe and smart to be attractive for industries,” says Thomas Berning, Senior Risk Consultant within ARC Liability CEE, at AGCS. “Safety and ergonomic solutions are not convincing for investors if those solutions entail only costs and not benefits. Avoiding costs is the benefit. Being smart makes cobots more flexible than human employees.” In addition, cobots aren’t restricted and can work 24/7 performing different tasks for which they’ve been programmed. But cobots need humans to collaborate with them.”

Primary uses of cobots consist of three general tasks: picking and placing items from one location to another, handling materials, and assembling – tasks which will account for 75% of all cobot revenues in the next five years. Small-to-medium enterprises (SMEs) continue to drive global growth in a market that was worth less than $400mn in 2017 but grew by more than 60% in 2018 to almost $600mn. It should reach $7.5bn or more by 2025 [4] – when it is estimated that nearly 35% of all industrial robots on the market will be cobots [5].

  • Not standard regulations regarding cobots
  • Technical problems leading to downtime issues
  • Cyber-attacks - security weaknesses such as default configurations, authentication mechanisms and open-source components could enable hackers
  • Product recall - malfunction/programming flaw could introduce inconsistencies and increase product liability exposure
  • Standard commercial general liability policies cover third party related accident scenarios
  • Workers compensation and employers liabilty policies could provide coverage for employee injury or fatality
  • Inferior products could result through a malfunction. Product liability insurance may be necessary
  • Are there appropiate coverage limits on property, general liability, equipment breakdown, and business interruption? If the cobot is faulty or breaks down, who is responsible?
  • 35% of all industrial robots by 2025 are predicted to the cobots
  • Cobots market predicted to be worth $1bn in total revenue by 2020
  • Can run 24/7, 365 days a year with little interruption
  • Require no barriers to keep humans separated from automation hazards
  • Able to complete complicated and dangerous tasks
  • Perform ergonomically unfavorable work steps, resulting in fewer human injuries
  • Increase productivity
  • Are less costly, more safe and more efficient compared to standard robots

As an example of their proliferation, says Berning, a welding robot’s only purpose is welding but several are needed to perform all the welding tasks an automotive industry plant will need. Depending on the workload, however, only one cobot may be needed – a significant cost-saving.

The market is expected to surge to $1bn in total revenue in the coming year, with over 40,000 cobots entering the industry [6]. Europe, especially Germany, the UK and France, lead the cobot market share, followed by North America. Although the Asia-Pacific region has not grown as quickly, it is expected to see the most growth in coming years as demand for automation expands in China, Japan and India. “Robots and other industrial processes have arrived late in Asia, with the exception of Japan, but they have arrived,” adds Berning.

Market growth is mainly driven by the increasing demand for light-tomoderate cobots with payload capacities between 5kg and 10kg (11lbs and 22lbs) – the weight a cobot’s arm can lift without damage. These lightweight applications are easy to start-up and are safe, highly adaptable, relatively affordable (averaging $24,000 each), and easy to plug-and-play. Such characteristics will help SME-sized businesses better compete with larger manufacturers [7].

"A cobot is a good investment for a manufacturer because it is less costly, more safe and more efficient than standard robots,” says Oliver Lauxmann, Chief Underwriting Office – Liability, Global Practice Group Leader at AGCS. “Not only to mediate overstretched tendons and other occupational injuries but to increase performance and revenues. But safety was the original purpose of cobots when lost-time injuries became a key industrial measurement. Trained employees are key to their value.”

Cobots don’t require safety cages to keep humans protected but can work virtually hand-in-hand with them. They can sense obstacles and adjust their speed or reverse to avoid crashing into humans or other hindrances. “Robot-related severe industrial accidents have occurred globally over the past several decades, but the numbers have been low, even in countries with the highest per-capita robot deployment such as Germany or the US”, says Lauxmann.

“But that number is even lower when it comes to cobot-related accidents which are very rare but do happen, such as in 2016 when a roving security cobot at a shopping center in California ran into a toddler, knocking him down and running over his foot.” There are no standard regulations regarding cobots. Hence, safety standards, minimum requirements and protection principles (e.g. labor protection laws) vary across geoboundaries. Manufacturers and users of cobots, however, strive to comply with respective legal frameworks and legal norms to achieve marketing authorization approval.

Cobots have steadily been deployed into the workplace – predominantly in the automotive and electronics sectors but increasingly in the life sciences, logistics, chemicals and pharmaceuticals, food and beverage, and other industries. Source: iStock.

As an example, says Lauxmann, the German mechanical engineering industry association, Verband Deutscher Maschinen- und Anlagenbau (VDMA), supports the German government’s engineering standards with four protection principles for deploying cobots together with humans:

  1. Manual guidance: Cobot movement actively controlled by employee with suitable equipment
  2. Speed and distance monitoring: Contact between employee and moving cobot prevented by cobot
  3. Safety-related, supervised standstill: Cobot “freezes” in place if employee comes into its immediate space
  4. Power and force limitation: Contact forces between employee and cobot technically limited to safe level.

Elsewhere, the International Organization for Standardization (ISO) guidelines which have governed robot and cobot applications since 2011 are in need of enhancement, in light of fast-changing new robotic technologies. Updated standards are currently in the works to address collaborative operations.

Various other factors to the safe industrial application of cobots include ensuring data network stability to avoid issues related to integrating new systems, safeguarding a stable power supply to avoid technical problems leading to downtime issues, maintaining data security to avoid too many people having proprietary production knowledge and protecting against cyber-attacks, as security weaknesses such as default configurations, authentication mechanisms and open source components could allow hackers to easily take-over industrial cobots [8]. In addition to these scenarios, product recall is also an issue, as cobots play an integral role in product quality, but a malfunction or programming flaw could introduce inconsistencies and increase product liability exposure.
Assisting builders: Japanese company Shimizu is testing robots for use on building sites, given a shortage of workers in the Japanese building industry. The robots will be capable of transporting building materials and welding girders.
Maintaining aircraft engines: Rolls-Royce has partnered with the University of Nottingham and Harvard University to develop insect-like robots that will simplify the maintenance of aircraft engines. With a diameter of approximately 10mm, such robots ensure a visual inspection can be carried out in minutes rather than hours.

“Where cobots and humans share the same workspace and work closely together,” says Lauxmann, “the main safety precautions that are needed while operating robots (e.g. safety technology, protective fences, buffer spaces, and physical barriers) become superfluous. That’s a big advantage for cobots.”

Still, he adds, cobots are no lone component in a production system but a piece of the whole and, as such, form one part of a general risk assessment process that businesses need to follow. Bottom line is that any company implementing cobot technology should conduct a thorough risk assessment of the entire system – application, tooling, controlling mechanism, peripheral equipment, and the robot itself, not to mention the workspace and the employee. Depending on the respective local legal framework, various insurance products provide coverage for cobotrelated and -caused accidents.

Standard commercial general liability (CGL) premises and operations policies cover third-party injuries by a cobot and, depending on employee injury or fatality, workers compensation and employers liability policies could provide coverage. Regarding product liability or recall coverages, insurance would cover the integrity of cobots produced by companies, whether using cobots or not, as well as the products produced by cobots.

“AGCS does not see a need currently to develop a separate liability insurance product exclusively for cobots,” says Lauxmann. The amount of cobots used in industrial production processes, services and other activities will definitely increase further and insurance will continue to play a role in risk mitigation, Lauxmann adds. The next level of cobots will be cognitive robots that deal with unforeseen situations even in complex environments and that will be equipped with a wide range of sensors so the cobots can perceive their environment. These machines will also be able to improve their behavior through learning.

Thomas Berning: thomas.berning@allianz.com

Oliver Lauxmann: oliver.lauxmann@allianz.com

[1] US Depart of Labor, Occupational Safety and Health Administration (OSHA), Accident Search: Robots, July 24, 2019
[2] OSHA
[3] Fraunhofer IFF, Digitale Assistenzsysteme, AGCS Trend Compass, Cobots, 2019
[4] Interact Analysis, Collaborative Robot Market, 2018
[5] Research and Markets, 2018 (AGCS Trend Compass)
[6] ABI Research 2015 (AGCS Trend Compass)
[7] Forbes, The future of work: Are you ready for smart cobots?, August 29, 2018
[8] Security Intelligence, Cybercriminals could easily take over industrial cobots, researchers warn, August 24, 2017
This article is part of the our Global Risk Dialogue. Appearing twice a year, Global Risk Dialogue is the Allianz Global Corporate & Specialty magazine with news and expert insights from the world of corporate risk.
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