Following poor economic growth in Spain over the past year, the media has recently reported some good news – news which could, at least in part, be a quick fix for many Spanish companies' balance sheets.
The good news in question is the increase in consumer spending in neighbouring countries and the increase in competitiveness of Spain's exports. These two factors led to a 17% increase in Spanish exports in the first eight months of 2010.
For the industrial risk insurer, the consequences of this are obvious: we must develop products to accompany Spanish businesses on their international ventures, providing them with the maximum possible protection against any event or circumstance that could negatively affect the result of their international initiatives.
By applying risk management models it has been possible to develop integrated export protection programmes that aim to minimise the random risks faced by businesses, over and above normal enterprise risks. A number of unexpected, unwelcome situations can arise and as a consequence, there is a broad portfolio of insurance solutions available.
One potential risk relates to claims that could be made against businesses for damage to third parties caused by exported products, where such products are in some way faulty.
Examples of this kind of situation often crop up in the media, particularly when they involve mass consumer products. It is not unusual where a product causes harm or damage to a third party for that party to make a claim against the business. Where these good have been exported, the business, which could be a manufacturer, exporter or brand owner, faces the added complexity of the international nature of such claims.
It is, therefore, vital that businesses consider product liability risk associated with exports. Companies should analyse the intrinsic risk of their products and minimise these using the necessary quality controls and audits. Extensive liability insurance cover should also be purchased.
It is also important that the insurance cover is appropriate for the product: a product aimed directly at the end user is not the same as one which is exported to other businesses for use as part of their own end product.
The cover must also take into account the international nature of exports, by providing for the fact that the claim may take place in a foreign country and that the legislation to which the claim is subject may also be foreign.
Finally, the insurance cover should encompass both compensation payable and defence costs, which can be significant when foreign courts are involved; and cover the costs of withdrawing the products from the market if there is evidence of potential danger, in order to avoid harm or damage to third parties.
The Spanish insurance industry must be prepared to support Spanish businesses in their international initiatives, helping them to minimise risks and focus their efforts on achieving greater market share and commercial success.
Ana Pérez is the general liability manager of Markel International Spain
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