Growing consumerism, supply chain globalisation, new technologies, and the need to innovate are driving increasing product liability claims, according to a Global Insurance Law Connect (GILC) report looking at trends in 17 countries including Australia.

The trends in global claims stem from a combination of consumer and regulatory pressures, GILC Chairman and Sparke Helmore Partner Gillian Davidson says.

Concerns around privacy and environmental preservation are front of mind for many consumers, and a growing body of legislation providing greater consumer protections has led to increased awareness of product liability insurance.

“The global tide of regulatory and legislative change is set to encourage consumers and corporates alike to increasingly hold manufacturers, importers and suppliers to account for the products and services that they provide,” Ms Davidson says.

The rate of growth is also likely to be impacted by legislation around class actions and third-party funding that will empower consumers seeking to hold manufacturers, suppliers, and importers of products to account.

Australia’s product liability regime is a combination of common law, contract and the Australian Consumer Law, which contains a prohibition on misleading and deceptive conduct, a regime of consumer guarantees, and imposes strict liability for products found to have safety defects. 

With recent changes and developments in case law, the range of defendants is broad and can include manufacturers, suppliers and retailers, but they are usually corporate entities, Sparke Helmore partner in Australia Kiley Hodges says.

Claimants range from individual consumers and small businesses to large corporates and the Australian Competition and Consumer Commission, depending on a matter’s scale and complexity.

Class actions have rebounded this year in Australia, after declining last year compared with the preceding decade, with actions involving pharmaceuticals, pesticides, chemicals, medical devices, motor vehicles and consumable products.

Ms Hodges says legislative changes were passed last November to increase penalties for companies breaching competition and consumer laws, and unfair contract term amendments will take effect next month.

In New Zealand, the residential building sector accounts for the greatest number of product liability claims by volume, mostly relating to weathertightness compliance under the building code and in regards to fire safety and internal and external cladding.

The report says new technology platforms and tools such as artificial intelligence, and the speed at which they are entering the daily lives of consumers and businesses, is throwing up challenges for regulators and legislators.

Global supply chain complexity is increasing complications from a liability perspective, according to GILC, a global alliance of insurance law firms.

“Whether countries have the most consumer-friendly laws in the world and a mature product liability market to match, or whether they have evolving legislation and a nascent insurance market for these risks, it is clear that this class of business will continue to grow at a fast pace in the coming years,” Ms Davidson said.

“In this rapidly evolving market, insurers will need to be alert to new exposures and opportunities alike.”