Product liability

In this chapter of our Annual Insurance Review 2018, we look at main developments in 2017 and expected issues in 2018 with regards to product liability.

Key developments in 2017

In August, the London Fire Brigade (LFB) sent an open letter to the Prime Minister asking for changes to be made in relation to the safety of white goods. The LFB is concerned about the number of people across the UK continuing to use faulty white goods. There have been a number of significant fires in recent years caused by white goods – indeed the initial cause of the Grenfell Tower fire in June is believed to have been a faulty fridge freezer.

In its letter, the LFB calls for a single register for UK product recalls, so consumers can check their white goods easily. It is estimated that the success rate for electrical product recalls is currently only between 10%and 20%. The LFB also asks for higher standards to be implemented in the manufacturing of white goods.The letter specifically requests that manufacturers cease to produce fridges and freezers with flammable plastic backing. The UK industry watchdog Which? has also called for change, stating that the current British standards are deficient and inadequate.

In further recommendations, the LFB says all appliances should be marked with a model or serial number so they can be identified in a fire, and that producers and distributors should be made to improve their assessments of white goods’ safety, specifically to take into account the risk of a fire starting while people are asleep.

What to look out for in 2018

The Government has recently published its Automated and Electric Vehicles Bill, which would extend compulsory motor insurance, as provided for under the Road Traffic Act 1988, to cover product liability for motorists using autonomous vehicles.

The legislation will mean a single insurer will cover both the driver’s use of the vehicle and the automated vehicle technology. There had been concern that confusion would arise if there was an incident involving an autonomous vehicle as to whether to pursue the driver or the manufacturer, which in turn would lead to a delay in innocent parties receiving compensation.

Under the Bill, when an automated vehicle is determined to have caused a crash, the victim will have a direct right against the insurer. The insurer will in turn have a right of recovery against the responsible party, which could include the vehicle’s manufacturer.

The Bill is currently at the report stage in the House of Commons and could become law during 2018,although the Secretary of State would need to confirm its commencement date. We suspect this will be reasonably soon after.

With the increasing development of autonomous vehicles, and their imminent use on the road, it is unlikely to be long before we start to see the first claims arriving.

Download our full Annual Insurance Review 2018 for more insights.