In 2007 there were over 10 million consumer-product related injuries treated in hospital emergency departments, according to the National Safety Council. While the statistics reveal injuries from seemingly innocuous objects — 532,061 injuries associated with beds, for example — the list of consumer products involved in injuries includes a large number of “specialty products.”
Specialty products are products that are capable of inflicting bodily injury and/or property damage that is significantly higher in severity than it is for other products.However, the term “specialty product” is something of a misnomer as most of these products are common goods found in homes and businesses around the world. Ranging from small household appliances to all-terrain-vehicles to ladders, these products offer many opportunities for misuse.
Together, agents, brokers and insurers can work with companies that manufacture, import or distribute these specialty products to develop casualty insurance policies and loss control strategies to help keep consumers safe and mitigate damages.
Outline the Risks
When an agent or broker submits a specialty products account, the insurance underwriter and loss control expert outline the risks involved with this particular piece of business. Central to that discussion are the client’s manufacturing processes and the information included on the product’s warning labels. During this assessment, the insurer will evaluate a client’s:
- Design Standards and the Design Team. Does the company adhere to U.S. or international standards such as ANSI, Underwriters’ Laboratories; ASTM; ISO; CE in the European Union? Is the design team qualified and is it staffed with certified engineers with graduate degrees?
- Quality Control Department. Does the company have a staffed quality control department? Are the quality protocols documented in writing and does the department conduct product testing?
- Warning Label Content. Do the warning labels warn of the potential hazards involved with intended product use? Do the labels provide proper usage instructions? Do the labels also detail how not to use the product?
- Product Operations Manual. Does the manual outline usage and service information?
- Instructions/Warning Label Design. Are they developed and placed on the product based on a comprehensive risk assess-ment? Are they well-designed (which can help eliminate some hazards). Warning labels, instructions and the product operations manual have the unique task of imparting information on the use, misuse and abuse of a product.
All-terrain-vehicles (ATVs) provide a good example of how this looks:
- ATV intended usage information will include instructions that ATVs should be driven off-road.
- ATV misuse information will instruct owners that driving the vehicle on the road is not the intended use.
- ATV abuse information will notify drivers that using the vehicle for extreme sports is an abusive activity.
Falling Off the Ladder
One product that is covered in warning labels, but that many people still fail to use as intended, is the ladder. Anyone who has ignored the words on the top rung of the ladder that read “This is not a step/Do not step here” should not be surprised that the major exposure for ladders is product misuse. Associated with over 175,000 emergency room treated injuries in 2007, ladder injuries have increased more than 50 percent since 1990, according to the National Safety Council. Unlike agents, brokers and insurers who see the claims related to ladders — or any other consumer product — every day, the average consumer doesn’t usually think that something can harm them.
Of course, not all product misuse is as deliberate as standing on a ladder’s top rung. Deer tree stands used by hunters are not one-size-fits-all and come with weight limit guidelines on the package. However, if a consumer does not read the guidelines and uses a deer tree stand that cannot support their weight, the stand could collapse. While not deliberate product misuse, it is misuse of the product because even though the user tried to use it as intended, failing to read the guidelines, subjected the tree stand to an activity for which it was not intended.
Products such as deer tree stands that are manufactured almost exclusively outside the United States add another layer of risk that agents, brokers and insurers must address in a customer’s insurance policy. Oftentimes consumers injured by a product do not have legal recourse outside the United States, putting distributors and importers in the front line of claims. By incorporating into its operations plan a process that ensures all manufacturers and suppliers — both inside and outside the U.S. — adhere to quality control standards, a company can help mitigate its exposure to this risk.
By working with an insurer that has an extensive international presence, agents and brokers can help their clients become better prepared to protect their operations in today’s global marketplace. Specialty products and their inherent risks come in all shapes and sizes. By partnering with an insurer that has experienced professionals around the globe, agents and brokers can help their clients mitigate product use, misuse or abuse.
Corwin is vice president of primary casualty, Russo is assistant vice president of primary casualty, and Paw is assistant vice president of primary casualty at Liberty International Underwriters.
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