Tag Archives: Foreign Products

Product Liability/Product Recall and The Cost Of Human Life In The U.S.

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I heard something both comforting and disturbing at the same time the other day, when I was talking with a Product Liability wholesale broker. 

We were talking about a prospect that designed and manufactured big commercial slides for water parks and the type of claims typically associated with this product liability risk. 

The disturbing part of the conversation was that he said many of the big designers and manufactures of high risk products such as waterslides were taking their new designs overseas to sell before bringing them back to the U.S. to sell because the cost of a human life was so much less in other foreign countries than it is in the U.S.   In other words, if the design of the product turns out to be defective and people are injured or die, it is much less expensive to handle claims in other countries than the U.S. 

I guess the comforting part of this conversation was knowing that the products in the U.S. my children are using are much more likely to be safe because, if they are not, companies know that there could be a costly product liability lawsuit or an expensive recall of their products.

While I am happy that my children are safe, I am also a little sad that they do not get the opportunity to learn to dive off a diving board or swing on a tire swing because insurance premiums make it too expensive to provide such activities or products.

Administrative Costs For Children, Household And Recreational Products On The Rise

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Let’s face it the Consumer Product Safety Commission has come under increasing fire from congress and the public because of the overwhelmingly large number of product recalls over the past few years – especially for foreign products imported into the U.S. It has become obvious that CPSC lacked the resources to adequately oversee all the things necessary to keep the American public safe.  As a result, on August 14, 2008 the President of the United States signed legislation that will reform the laws and regulations governing the CPSC. 

The U.S. Consumer Product Safety Commission is the federal agency responsible for overseeing product-safety recalls of toys, household products, recreational equipment, some vehicles, and consumer products not under the jurisdiction of other federal agencies.

Because we provide product liability insurance to a large number of manufacturers, importers and distributors of children’s, household and recreational products, I was particularly interested in how much compliance with CPSA of 2008 was going to cost in order to comply.

Below are 4 new administrative costs for businesses that manufacturers, importers and distributors of children, household and recreational products must bear:

  1. Permanent markings must be on all products to help identify them in the event of a product recall;
  2. Businesses must provide registration forms to consumers and keep accurate records of registered consumers;
  3. All children’s products must be tested by an independent testing company before they can be imported or distributed;
  4. Warnings that are on or with the products must also now be included in the advertising.

Business owners that do not feel compelled to comply with the new CPSC statutes are subject to much harsher penalties.  Civil penalties will rise to $100,000 per violation and a cap of $15,000,000.  Criminal penalties have also increased permitting imprisonment and forfeiture of assets.  Also, state attorney generals can sue companies for violation of CPSC statues.

While we believe that more needed to be done to protect the American public from the high number of unsafe products being imported, we also understand that the administrative costs for small businesses in the U.S. continue to make it more difficult for these businesses to be profitable and stay in business.