By Flavia Mpagi
The East African Community (EAC) Secretariat has issued new regulations to enhance the operationalisation of the EAC Standardisation, Quality Assurance, Metrology and Testing Act (SQMT) of 2006.
The regulations will facilitate the issuance of quality marks on products conforming to regional and international standards, while providing consumer confidence in goods and services traded in the East African region.
Although this may be comforting to consumers, it by no means represents the opportunity to manufacturers, distributors and retailers to relax risk management policies.
Many more Ugandans today are engaging in the business of manufacturing, distribution and retailing. No matter the type of product, the public counts on the manufacturer to provide a product that is safe, of sufficient quality and supplied with adequate instructions on its usage. However, for many reasons, several products do not always meet those expectations or standards, thereby causing injury or loss.
When things go wrong, the damages awarded in these cases can be extensive. For example in 2012 Toyota agreed to settle accelerate pedal defect lawsuits for $1.1b.
Suppliers of goods can also be found liable. Many people mistakenly think that because they do not manufacture a product, and simply distribute it, they cannot be found liable for it. For example, many consumer products are manufactured and exported from China. However, because of the unlikelihood of a successful lawsuit against the Chinese manufacturers, as a supplier of these products or parts, you need to have insurance for protection against potential lawsuits.
Product liability insurance protects businesses from claims from the public related to the manufacture or sale of products, food, medicines or other goods. It covers the manufacturer's or seller's liability for losses or injuries to a buyer, user or bystander caused by a defect or malfunction of the product; and in some instances a defective design, or a failure to warn.
Furthermore, the contractual agreements between the different players in the supply chain should be carefully reviewed as risk can be assumed through these. Risk managers should take extra care with documentation and record keeping. Items like serial, batch numbers and knowing and recording when batches were sold, and to who will enable companies better manage product issues should they occur. With the population’s increased awareness of their rights and the publicity given to court awards, manufacturers and suppliers are prone to lawsuits.
Visit an insurance or brokerage company for more information about insurance specific to your line of work.
The author works with TD Insurance, Canada