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The digital economy requires technology-specific amendments of the current legal framework, not systemic change

Autonomous technologies, 3D printing, artificial intelligence (AI) and the internet of things (IoT) – these developments are raising questions about the associated risks. All these questions are of particular relevance to the insurance sector.

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New technological achievements need intelligent regulation and a balanced liability regime. This system already exists: the applicable European product liability regime and its centrepiece, the Product Liability Directive, adequately account for the interests of manufacturers and consumers in an increasingly digital world. It promotes innovation and growth, while ensuring consumer protection and security at the same time. 

Mitigating new risks: adding specific norms and standards to the existing liability framework

Whether self-learning systems in medicine, autonomous robotic lawn mowers or connected fridges – products must meet justified security expectations. If they fail to do that, they are legally defective and the manufacturer is liable for damages caused by such products. Current product liability law is technology-neutral. Technology-related specfictaions of the existing liability framework must happen within product safety law or through industrial standards, not through a fundamental systemic change.

Simply allocating liability to the manufacturer hampers innovation 

The current rules create a fair framework fit for tomorrow’s digital economy. A comprehensive shift of liability to the manufacturers would be counterproductive. They are already liable for losses stemming from product defects even when they are notactually at fault. Manufacturers should not, however, have to be responsible for claims resulting from problems in areas outside their control, for example poor maintenance or misuse. Maintenance and repair must be performed professionally. Consumers must use products responsibly and appropriately, failure to do so entails full responsibility. This principle should be maintained. 

Mandatory insurance or compensation funds are not a solution

The new digital technologies encompass a daily growing range of devices, applications and associated risks.. The much talked about mandatory insurance is not the answer to these highly complex processes. The voluntary insurance market already offers risk-appropriate customised solutions offering optimal protection to manufacturers and users. Moreover, compulsory insurance can lead to unfairly high premiums for minor risks and ultimately disproportionately high consumer prices. Compensation funds are also counterproductive. Just like mandatory cover they do not result in improved products, in fact they can even have the opposite effect. Pools remove the incentive for manufacturers to obtain adequate insurance and invest in product safety.