Image of outside building. Side view.

Product liability

Published on 10 January 2022

In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for product liability.

Key developments in 2021

October 2021 saw the Food Information (Amendment)(England) Regulations 2019 ('Natasha's Law') come into force. The Law means the Pre-Packed for Direct Sale ('PPDS') foods are now subject to more stringent guidelines and any packaging must now list the name of the food and a full ingredients list, with any of the 14 major allergens being emphasised therein. 

Enforcement is tasked to Local Authorities. In the first instance, businesses will be given advice but failure to act on this may result in an Improvement Notice being issued. Non-compliance thereafter will result in a penalty fine, or, in the most serious cases, prosecution. 

The Food Standards Agency has issued extensive guidance to assist businesses and research conducted indicates food product recalls due to failure to correctly label allergens in the last year has dropped by 10% in the last year, potentially due to increased awareness in the industry. However, we anticipate that the end of 2021 will see the start of prosecutions for those not complying now the Law is in force. As such, both underwriters and claims professionals should be mindful of the possible exposure of businesses in relation to the new regulations. 

Also, in October 2021, the Medicines & Healthcare products Regulatory Agency (the MHRA) issued updated guidance relating to the licensing of e-cigarettes (and other nicotine-containing products). The MHRA's guidance seeks to clarify the requirements that manufacturers must satisfy in order to be granted a licence. 

Manufacturers now have more certainty over the evidence that must be submitted before authorisation is granted, and how reference products can be used in order to make the regulatory process quicker. This initiative may lead to England becoming the first country in the world to prescribe e-cigarettes as a licensed medical product. To guard against litigation and regulatory risks, we expect insurers to request information from manufacturers that shows they have engaged with the MHRA in order to fully consider product safety.

What to look out for in 2022

Following Brexit, the Government previously set a deadline of 1 January 2022 at which point all products placed onto the UK market required UKCA marking (alongside and/or instead of EU CE marking). However, following the continued impact of the pandemic and to provide more clarity, the deadline has now been extended until 1 January 2023.

The Government has been keen to highlight that this is a "final" deadline and that businesses "must take action" to ensure compliance and as such, we anticipate that 2022 will see these changes come into force and a surge in businesses seeking guidance on how to comply with the new rules. In the longer term, we predict seeing cases of where businesses have failed to comply raising the possibility of enforcement action. 

In 2022, we also expect to see manufacturers invest in artificial intelligence (AI) products that depend on machine learning. Machine learning has particular potential in the healthcare sector where it can transform how patients are treated, by deriving insights from the vast amount of data generated in hospitals every day. Governments and hospitals are drawn to such products due to the savings that AI can generate in swifter and cheaper patient care. 

Insurers should be prepared to work with their clients to guard against the risks associated with machine learning. Such risks include products that are developed without input from clinicians on the possible risks to patients, data that is used to 'train' machines that are not representative of the intended patient population, and products that are placed on the market before the risks of injury and side-effects are adequately investigated.

Written by Peter Rudd-Clarke & Elinor Sidwell.

Download our full Annual Insurance Review 2022 for more insights.