Product Liability and Product Recall Insurance A Market Perspective 9th November 2005 Product Liability and Product Recall Insurance A Market Perspective Guy Malyon London

State of the Liability Insurance Market Litigation clearly on the increase throughout Europe Class action disease is spreading Increased EU regulation Accession countries realising the effects of EU membership Punitive damages appearing in the UK Up until Katrina/Rita/Wilma the market was softening Now it is flat Re-emergence of European insurers has increased Liability capacity Gerling and Axa for example Product Recall capacity is also increasing Marsh

Market Reaction to General Product Safety Regulations Overview Product Recall insurance is not compulsory Enforcement agency powers have increased Demand will outweigh supply Risk management in UK is sophisticated in general terms Market Place Three main products: Accidental/Malicious/Extortion Limited markets at primary level Favourable loss ratios in recent years Sudan I More capacity and cheaper premiums Marsh

Liability Insurance Across Europe A comparison with the UK Insurance Comparison Wider cover: financial loss, recall, rip & tear Lower deductibles Cheaper premiums Claims made Vs Occurrence ‘Full value’ programmes Legal Comparison Codified legal systems Average awards Limits purchased Large claims in Europe Marsh

Limit of Liability Survey 2005 6000 companies surveyed in 43 countries across 6 continents Average global limit purchased - $58 million Average European limit purchased - $60 million Companies that experienced a loss buy three times the limit of their peers Utilities, Chemicals, Pharmaceuticals, Transportation buy the highest limits Governmental, Retail and Consumer Brands buy the lowest limits On average Companies with North American exposure buy three times the limit of those without Eastern Europe buy the least amount of cover Marsh

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