Best's Review


Risk: 5G Technology
Need for Speed

5G could engineer losses out of insurance, but the technology doesn’t come without risks. Special Risk Section sponsored by LexisNexis.
  • Kate Smith
  • April 2020


Fifth generation (5G) wireless networks are expected to radically transform industries, enabling self-driving cars, robotic surgeries and automated factories, among other things.

With its fast speeds and low latency, 5G will usher in a new era of connectivity, prompting an explosion of internet of things (IoT) devices and spurring the development of smart cities. The International Data Corporation forecasts the number of 5G connections to grow from roughly 10 million in 2019 to 1.01 billion in 2023.

But the promise of 5G does not come without risks—from increased cyber exposures to health and environmental concerns—and balancing the risks of this emerging technology (and its use cases) is critical for the insurance industry.

“From risk managers' or from insurers' perspectives, regardless of the risks, 5G looks pretty inevitable,” Martin Frappolli, senior director of knowledge resources for The Institutes, said. “The best thing we can do is learn. You've got to be prepared and find ways to mitigate the risk.”

Frappolli discussed the potential risks and benefits of 5G with Best's Review

Martin Frappolli The Institutes

5G, to the extent that it can make these smart home devices more ubiquitous and more user-friendly, brings the potential to engineer out a lot of homeowners losses.

Martin Frappolli
The Institutes

What should insurers and risk managers be concerned about when we talk about the emergence of 5G?

To answer that, I'll take a little step back and just talk about what 5G is. Initially, it confused a lot of people.

Five years ago, I got a new wireless router in the house that was 5G, so we're using the same terms for something that really isn't the same thing.

Just for setting a baseline, 5G is simply the newest generation of a wireless technology for a digital cellular network. If you've got a smartphone today, unless it's really brand new, it probably has 4G technology.

When we talk about the concerns, and what should insurers and risk managers look for, it's important to understand 5G comes in three different flavors. They're called low band, mid band, and millimeter wave.

That low band 5G actually uses a frequency range similar to what 4G is. The 5G millimeter wave, that's the fastest flavor of 5G. It also has the shortest range and, therefore, requires more cells, more antennas, and doesn't travel easily through walls and windows, so it's probably not ideal for a lot of indoor deployment. The mid band 5G is the most widely deployed.

With that in the background, your question is why the insurers and risk managers need to be concerned with it. Like every new technology it's going to offer some opportunities, and perhaps risks.

The major risks involved are because 5G, especially at the highest speed, operates at a different frequency than 4G. That highest grade, the 5G millimeter wave, operates at a spectrum that's very close to the same frequency used by weather and Earth observation satellites.

There are some reports that 5G could interfere with services like weather predictions, and therefore have a potentially serious impact on public safety.

There's also always going to be concerns about espionage, spying related to new networks and new hardware. Especially to the extent that this hardware is manufactured in China, there is concern that it will come with built- in espionage capacities.

This ties into the cyber and privacy concerns. 

Are there health concerns over the millimeter waves or the high frequency?

From what I've seen, there are a lot of opinions. The internet is full of information, but what's legit and what isn't?

You can ask, “Well, what's different with 5G? Why do we have concerns with 5G that we didn't have with 4G?” The key feature of 5G is it's operating at this much higher frequency.

The 4G uses microwave frequencies below 2,500 megahertz, whereas 5G can use frequencies up to 28 gigahertz. There's a big difference in frequency. There will also be an abundance of new antennas every few hundred yards to support the higher speed type of 5G.

There are some who have concerns about increased exposure to radio frequency electromagnetic fields and the possible carcinogenic effects tied to that. Having said that, there are no reliable studies that prove or disprove the safety of 5G. 

What are the environmental risks?

I haven't seen many credible reports on the environmental risks presented by 5G, unless you count the expanding number of cell antennas as somehow damaging to the environment.

You can go online, and you can find dozens, maybe hundreds, of websites devoted to environmental concerns about

5G. Much of that has the feel of junk science.

Winnowing through it, the one thing that struck me as a legitimate concern—and it's not just 5G, it's cellphones in general—is the expanding number of devices and sensors that live on the internet of things.

That is, these all contribute to a growing dependence on certain rare earth-type minerals. That can introduce a vulnerability to our national security if another country is positioned to control the supply or cut off our supply to these minerals once we've built networks that depend on them. Further, there is a lot of criticism about the working conditions in many countries for the people engaging in extracting these minerals.

5G is expected to lead to an explosion of connected devices. What do you see as the IoT impact of 5G?

5G, to the extent that it can make these smart home devices more ubiquitous and more user-friendly, brings the potential to engineer out a lot of homeowners losses.

These devices can be fully leveraged to not only control the home—with your smart thermostat, your smart garage door, your smart refrigerator—but to anticipate and prevent issues. They can alert you that there's a looming water leak in your basement or a short circuit in your garage.

Smart devices are evolving from post-event alarms to pre-loss sensors. For example, a sensor that detects or anticipates a water leak can also shut off the water supply.

That could put us on the verge of engineering ourselves out of many of the common types of homeowners losses. Water losses are involved in a really high percentage of homeowners insurance claims. The big dollar ones are more often from storms and from fires, but the bulk of homeowners claims involve water losses.

When you look at the history of risk management and insurance, a lot of types of coverages start off as, “Oh, here's a horrible, unavoidable circumstance. Let's buy insurance so we can have compensation for the losses.”

As technology and engineering evolve, a lot of those things move to, “Let's eliminate most of the losses and then just insure for a very small risk that remains.” 

Does the same hold true for auto lines?

In my mind, that's the biggest potential for 5G. The success of autonomous vehicles really depends on communication between your vehicle and the other vehicles, as well as between your vehicle and infrastructure.

The higher speed and the lower latency that 5G brings can be a difference maker in facilitating that type of instant communication between vehicles or between the vehicle and infrastructure that's needed to avoid crashes.

Given that 95% of all our accidents are the result of operator error, the potential there is just huge. I've long been excited about removing operator error from motoring and the potential that that brings, and 5G could be an important step in moving us closer there. 

What do all of these connected devices mean in terms of cyberrisk?

It's always got to be top of mind. The deployment of so many more antennas, cell towers—even though they may not be a tower but rather a small pole on a rooftop—could go either way.

They could be used to enhance the security of the network, or each one could be a point of vulnerability. This is just crystal ball stuff because I don't know. I expect we'll see some of both.

It's the constant race between people who design and maintain communications equipment and the people who are seeking to hack it. Who's going to be a step ahead?

That's also part of the danger when you see any explosion of IoT devices. When you've got a smart coffeemaker from Black &Decker that's connected to your network, you have to wonder how savvy the folks at Black &Decker are going to be in making a coffeemaker hack-proof. If Microsoft and even Apple cannot make every device and system secure, why would we expect it from companies that aren't technology experts?

That's a very practical concern. You've just got more players. More players could mean more vulnerability. If I go back to something we touched on earlier, the more of this equipment that comes from China, the higher our concerns would need to be to double, triple, quadruple check the privacy and security.

Kate Smith is managing editor of Best’s Review. She can be reached at

There’s So Much to Cover—Don’t Miss the Latest

Get more news stories like this delivered to your inbox by signing up for our article spotlights.


Back to Home