Product liability
In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for Product liability.
Key developments in 2023
There were two key developments in Europe related to products in 2023.
Firstly, as identified as something to watch out for in last year's review, there was the continued progress of the European Commission's directive for the liability of defective products. On 9 October 2023, the European Parliament's Internal Market and Consumer Protection Committee ("IMCO") and the Committee on Legal Affairs ("JURI") agreed a revised wording for the proposed PLD. The changes, including the replacement of "producer" with the term "manufacturer" to include providers of software, digital services and online marketplaces, when introduced will modernise a system of product liability that has been in place for the last 40 years.
Secondly, on 25 April 2023, the Council of the EU adopted the General Product Safety Regulations ("GPSR") which aim to reinforce product safety and consumer protection laws for products sold both online and offline.
The GPSR states that only "safe products (whether new, used, repaired or reconditioned) should be made available on the market. Where a product is found to be dangerous, businesses must immediately apply corrective measures and communicate the issue to consumers and the relevant authorities. In the event of a product recall, consumers are entitled to at least two options from the following: a repair, replacement or refund. The GPSR will apply in full on 13 December 2024, after a brief transition period to allow businesses to prepare for the new regulations.
In an unexpected U-turn from its post-Brexit regulatory reform the Government announced that British businesses will be able to use the CE mark on their products indefinitely. The UKCA mark was intended to replace the CE mark on goods being sold in the UK but businesses can now use both marks, either separately or alongside each other.
The decision was allegedly made to ease the burden on businesses whilst helping the economy to grow but there may be some backlash from businesses who have incurred significant costs on seeking advice on and implementing the UKCA marking.
What to look out for in 2024
Following a call for evidence in March 2021, it has been clear that significant changes were needed to update the UK's product safety framework to deal with AI, online marketplaces and the ESG agenda.
On 2 August 2023, the Smarter Regulation: UK Product Safety Review, was opened as part of the Government's programme of regulatory reform.
The new regime proposed by the Office for Product Safety and Standards ("OPSS") seeks to:
- Ensure business obligations are proportionate to the hazard presented by their products, exploring how to reduce compliance costs for lower risk products and make the conformity assessment process easier where possible.
- Shift the balance between regulations and industry-led standards to enable a more agile and responsive regulatory framework, allowing business greater scope to innovate when producing safe products.
- Use of digital solutions, such as voluntary e-labelling, to reduce business costs and explore how digital options can be utilised to reduce burdens.
- Address concerns regarding the ease with which unsafe products can be sold online, creating a fairer playing field so that shopping online is as safe as on the high street.
- Enhance the leadership and coordination role of the Office for Product Safety and Standards alongside addressing identified enforcement gaps.
Whilst product safety falls under the criminal regime and product liability falls under the civil regime, this Consultation also proposed a review of the current civil product liability regime in light of technological developments. The proposals which refer to the definitions of "product" and "defect" as being inadequate could mirror Europe's proposals which seek to widen definitions to consider technology, AI and online marketplaces.
The Consultation closed on 24 October 2023 and the feedback received will help shape both the product safety and product liability regimes in the UK over the next 12 to 24 months. Given the accelerated reforms in Europe, and the close relationship between the UK and Europe, the Government would be wise to act fast to ensure they do not fall behind.
Written by Andrew Martin.