Insurance encouraged under new producers' liability legislation

Manufacturers will be held directly liable for any damages occurring because of a fault in their products, according to a new law, published in the Official Gazette. Companies making TV sets, ice cream, or furniture will be held liable for those TV sets that explode, for the ice cream that makes consumers sick or for those cabinets that fall and injure their owners. The law will greatly push up demand for civil liability insurance for companies with regard to their products, a kind of policy that has not been very popular in Romania so far, unlike in the Western world.

In February this year, a brand new TV set exploded all of a sudden in front of a child who was watching cartoons. Fortunately, the child escaped unharmed, but the damages amounted to several tens of millions of ROL. According to the law published yesterday, the producer or importer of this TV set will have to answer to the authorities – not only for the material losses, but also for any injuries or psychological damage experienced by the child. Damages can reach several tens of thousands of dollars or even more. In the West, such figures can easily surge to hundreds of thousands or even millions of dollars.

The big household appliances companies already own this type of insurance.

“As far as I know, the group has insurance contracts for all of our products. Those at our Italian headquarters are dealing with this issue and the insurance also covers the operations in Romania,” said Eugen Paturan, country manager at Merloni Elettrodomestici, which owns the Indesit and Ariston brands of home appliances.

This also goes for Electrolux Romania, the local subsidiary of the Swedish home appliances producer. “Such laws must have been passed a while ago in Western Europe, as we contracted insurance policies for our products some time ago. This was a group decision, and those at our headquarters are dealing with all the details, though the policies also cover our operations in Romania,” explained Carmen Georgescu, marketing and communication manager with Electrolux Romania.

“I believe this is the best news I’ve got this year! They had been talking about this law for over a year and I can confidently say that everybody was waiting for it. Reading the law, I realised that it was drafted so as to match the reality?,” says Mihai Lucanu, Financial Lines, Casualty & Marine Manager AIG Romania SA.

“Even before this normative act was passed, the damaged parties had the right to file lawsuits against the producers of faulty products, for the damages caused by the respective flaws. However, once Law 240/2004 was published, a special producers’ liability was introduced, which eased the victims’ situation,” said Ruxandra Bologa, Associate Attorney with law firm Nestor Nestor Diculescu Kingston Petersen.

However, producers were already able to buy insurance against damages generated by faulty products, even before Law 240/2004 entered into effect.
sorin.pislaru@zf.ro