Forecasting Product Liability by Understanding the Driving Forces

30 June 2006
By Lucy Allen, Dr. Denise Martin, and Dr. Faten Sabry et al.

In the past decade, asbestos litigation in the US has continued to escalate, necessitating the preparation of forecasts to establish financial reserves, to size bankruptcy trusts, to negotiate insurance buy-backs, and to inform M&A due diligence. While mass torts of this type have become fairly commonplace in the US, product liability is becoming an area of increasing concern in Europe and Asia. This article, published as a chapter in The International Comparative Legal Guide to Product Liability 2006, discusses strategies and modeling techniques that strengthen the effectiveness of claims forecasting efforts. While developed for forecasting US claims, these same techniques can be applied to forecast liability outside the US. Although these forecasts involve many uncertainties, the authors emphasize that by examining each of the drivers of liability and keeping in mind the fundamental progression of events from the sale of a potentially harmful product to the final claim settlement, it is possible to break this complex task down into clear, scientific methodologies and develop a rigorous liability estimate.

Published annually, The International Comparative Legal Guide to Product Liability provides current and practical comparative legal information for general counsel, government agencies, and private practice lawyers.

This article first appeared in the 2006 edition of The International Comparative Legal Guide to Product Liability, published and reproduced with permission by Global Legal Group Limited, London.