Written by There is always a tension between the need to produce or find products that are safe for consumers, and the need to let creativity flow in the manufacturing sector in spite of strict liability regulations or insurance costs. When a company calculates its production services and costs, it always has to plan for contingencies like the financial hit from product failures, recalls, refunds or repairs. The company must balance the desire to provide a quality product with the worry that such a financial loss, if it happens, could potentially cripple the manufacturer.
There’s no doubt that strict regulations are required. Consumers frequently find products to be defective, and not just in harmless ways but by suffering a medical injury or other serious loss. And the social cost of losses from injury, decreases in productivity and loss of business is very high. Even corporations lose substantially if they’re allowed to produce faulty products without consequences. Regulations have not been created just to inconvenience them, whatever their lawyers try to claim.
So the tension exists with a sort of spiral effect. Consumers find defective products and launch law suits to recover damages, have the products recalled, or have the products changed. Companies faced with high liability costs include them in their manufacturing production costs, and pass those on to the consumers, who then demand that since they’re paying those extra costs, the regulations had better be tightened, which increases the manufacturing costs further. And so it goes.
Because of the tensions, insurance companies have tried to help both consumers and manufacturers find products; namely insurance products that can carefully balance the two sides. Insurance firms provide basic liability policies that liability professionals can subsequently tailor to a company’s needs. For example, some policies would need to cover things like tampering or product recalls, while others wouldn’t. These custom-tailored policies help reduce some of the company’s costs. In the end, the goal is to create quality, consumer products that are safe and reliable. So insurance and government regulations both need to balance the need for consumer safety with the creative freedom of industry.
Rene Lacape is a well trained insurance broker. He has been handling many kinds of insurances for the past many years. He still does well in his chosen field and is sure to help more people who will need his expert advice. Contact him now.