Smart products combine a physical product with embedded software technology. This allows them to be more self-aware, self-organized and adaptive. Smart products are filled with intelligence, sensors and communication abilities. And they’re currently flooding the consumer market at approximately 5.5 million products a day.
An estimated 6.4 billion products are currently in the marketplace. Projections have 20 billion devices connected to the internet by 2020.
The whole point of smart products is operational improvements in efficiency, performance, safety and more. However, once smart products are online, they immediately become vulnerable to cyber threats that could compromise the owners’ privacy and security.
Smart devices comprise a wide range of consumer devices such as TVs, appliances, toys, wearables, and home security. We also find them in medical, aviation, city and weather-related products. In fact, I challenge you to find a consumer or commercial product where interactive software is not being used.
Unfortunately, no governmental oversight regulations currently exist for smart products. For now, it appears one of the best deterrents for manufactures and suppliers of smart products will be the potential costs of Product Liability lawsuits.
Product Liability is based on strict liability – manufacturing, design and instruction/warning defect. This means the injured party or plaintiff must only prove that the product involved was the approximate cause of the bodily injury or property damage to win the lawsuit. Just think of the endless possibilities – home security, traffic lights, air traffic control, and pacemakers are just a few examples.
Therefore, It appears insurance companies will have the immediate burden of determining which smart products represent good risks and likely want to make sure the new products coming into the U.S. market have a minimum level of security to be insurable.
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