Product liability

In this chapter of our Annual Insurance Review 2020, we look at the main developments in 2019 and expected issues in 2020 for product liability.

Key developments in 2019

2019 saw the food industry grappling with the challenges posed by allergies as food recalls relating to allergens jumped by 20%.

Whilst deaths from allergic reactions to food products are, thankfully, extremely rare, a combination of media interest and Government intervention is driving demand from the industry for enhanced product liability and product recall cover. 

Allergy recalls impacted all of the major supermarkets in the UK in 2019, with withdrawn products ranging from soup and nuts to beer and ice-cream. 

Industry is increasingly aware of the costs posed by injuries or death due to serious allergic reactions - including reputational damage, litigation and regulatory investigations. By comparison, the costs of recalling a product - involving legal fees, collection and destruction of the product, advertising and communications - can seem to be money well spent. 

"Natasha’s Law", named after the teenager who tragically died after eating a baguette from a sandwich chain that contained undeclared sesame, will require all businesses that sell food to print a full list of ingredients on pre-packaged food from October 2021. Whilst the new law does not take effect until next year, it is clear that 2019 was a year in which the food industry, buffeted by regulatory and media scrutiny, focused on the risks associated with allergens. 

What to look out for in 2020

Claimant law firms in the UK have picked up on well-publicised litigation in the United States concerning e-cigarettes. Whilst we expect claimant law firms to make a push to sign up clients in 2020, we expect that litigation over these products is unlikely to succeed. 

Litigation in the United States has been framed as personal injury cases where addictive products have led to strokes, seizures and respiratory problems. Such claims would be less likely get off the ground in this jurisdiction, for a number of reasons, including: 

• Manufacturers here can rely upon recent judgments in which the courts have found in favour of manufacturers of highly regulated products. A point emphasised by the courts is that a product is less likely to be found to be defective if it is compliant with regulations designed to make products safe. E-cigarettes fall into this category as they are regulated under either the Tobacco Products Directive or, depending on the manufacturer's intended usage, under regulations concerning medicinal products. 
• The body of scientific opinion suggests that manufacturers could deploy a successful "risk v benefit" argument that e-cigarettes promote discontinuance of smoking amongst the population as a whole. This supports the argument that e-cigarettes meet the standard set out in consumer protection legislation. 
• Claimant law firms may struggle to present data as evidence of wide-spread injury attributed to manufacturers of e-cigarettes (as opposed to other factors). The recent metal-on-metal hip litigation (in which manufacturers were successful) serves as a warning to claimant lawyers tempted to bring claims citing scientific opinion that is based on unreliable data that does not stand up to judicial scrutiny.  

If claimant law firms persist in bringing litigation during 2020 concerning e-cigarettes, we can expect manufacturers and their insurers to present robust defence arguments based on scientific data and recent case law concerning regulated products.

Authored by Peter Rudd-Clarke.

Download our full Annual Insurance Review 2020 for more insights.