Forensics

Product Liability

Forensic Services Newsletter

Forensic Services has a history of successful investigation into product liability claims.

A feature of this type of work is the knock-on effect, whereby a defect in a low cost portion of a finished item can result in the recall of goods hundreds of times the value. For example, in the canned foods or drinks industry, there are three tiers, as follows.

  1. Food companies that buy cans and fill them with food or drink.

  2. Can manufacturers.

  3. Suppliers of materials to make cans, eg, sheet metal, lacquer and gasket manufacturers.

A small quantity of gasket or lacquer with a value of US$0.01 has the potential to cause the recall of a can of food with a value of say US$1. Thus a single batch of inferior material has the potential to result in a recall worth millions of dollars.

A feature of such claims is a well established pecking order in many industries, whereby the supplier is in a poor negotiating position relative to the purchaser. Thus suppliers are reluctant to defend themselves and desperately want insurers to cover the loss so that they can retain the goodwill of a long time client. Purchasers typically admit no wrong. In reality, in our experience most losses follow a combination of mistakes or situations at more than one level in the supply chain.

In respect of liability claims, our consultants have dealt with a surprisingly diverse range of products, including the following.

  • Crabmeat, canned peaches and cherries, canned orange and apple juices.
  • Exploding bottles of soft drink and champagne.
  • Lacquers and other protective coatings.
  • Foreign objects in food and drinks.
  • Cans closures for soft drinks and other beverages, including problems with pop-tops.
  • Packaging materials, including laminated plastic, steel and aluminium sheet.
  • Fiberglass swimming pools.

This work can be technically demanding and requires skills in the following areas.

  • An understanding of technical cause and effect.
  • A sense for statistics and the significance of results, as well as the correlation between them.
  • The ability to liaise with insured's staff and an understanding of the different priorities and attitudes of production and quality control.


Regards



Barry Dillon