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

2. 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
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3. 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
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4. 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
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5. 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
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6. © Copyright - 2005 Marsh Ltd. All rights reserved.
The information contained in this presentation provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues.
This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Marsh Ltd, except that clients of Marsh Ltd need not obtain such permission when using this report for their internal purposes.
© Copyright Marsh Ltd. All rights reserved.
Marsh Ltd is authorised and regulated by the Financial Services Authority.
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