Risk managers can help their companies successfully defend product liability lawsuits by incorporating safety procedures in the design, manufacturing and marketing of their products.
Product liability specialists talked about prevention techniques Thursday at the Risk and Insurance Management Society's annual meeting last week.We're talking about a product reliability program here - not liability, said Joe Holwerda, assistant treasurer, financial services, at Premark International Inc. If you make a product reliable, then you won't have any liability.
Kenneth Ross, a lawyer with the St. Louis firm of Husch, Eppenberger, Donohue, Confeld and Jenkins, said, The tough part is trying to anticipate what the problems will be.
The laws are not telling you how safe your products have to be, Mr. Ross said.
But a product safety program, designed to prevent accidents and defend claims, can minimize the risks involved with product liability.
Don Scarbrough, staff consultant, product safety, at Nordson Corp., a manufacturer of industrial equipment, said his company's product safety program greatly reduced their exposure to damaging claims.
We don't want to have a bunch of lethal time bombs ticking away, Mr. Scarbrough said.
Nordson, which makes machinery for industrial adhesives and spray paint, has an elaborate system for responding to a potential claim, Mr. Scarbrough said.
Accidents are reported quickly and investigated promptly. The company offers to replace the damaged machinery, then stores the equipment that later can be introduced as evidence in court.
After the company's investigation is completed, Nordson explains how the accident happened to its client's workers.
We're able to suppress the claim, Mr. Scarbrough said.
The explanation helps to prevent future accidents, prepare for a possible defense and create peer pressure among workers not to file claims, he said.
Before the company sells its equipment, however, another set of product liability prevention techniques are followed.
The company closely inspects its vendors and their products. When designing its products, the company consults with a variety of safety experts and develops a series of quality control measures.
If you have things in place and it looks like a hard case to prove, then the plaintiff's lawyers will go away, Mr. Ross said.
Mr. Ross explained that some of the legal definitions involved in product liability cases have expanded in recent years to broaden liability.
Plaintiffs must show personal injury, property damage or economic loss for manufacturing, design or warning defects in the product.
Juries make product liability awards based on medical expenses, lost earnings and punitive damages, but jurors like to stick you if they think you did something wrong, Mr. Ross said.
The real money is being spent in defending and settling cases before they go to trial, Mr. Ross said.
Roman Diekemper, senior vice president at Chicago-based Marsh & McLennan Protection Consultants, a unit of New York-based Marsh & McLennan Inc., a large insurance broker, saidthe availability and cost of product liability insurance has improved in the last two years.