Software as a product and implications for (re)insurance

In this IIL reinsurance lecture Michaela Herron and Deirdre Munnelly discussed whether software can be considered a product and therefore subject to the product liability framework and if so, what this means for the insurance and reinsurance industries.

The concept of software as a product is becoming an increasingly relevant issue to our daily lives. Connected or 'smart' products are quickly becoming the norm, software medical devices are, in some scenarios, substituting doctors and it will not be long before the roads are overrun with driverless cars. Each of these products have one major theme in common - software is at the heart of their operation.

However, with innovation comes risk. Corrupted software in a 'smart' toaster could cause a house fire, a malfunctioning algorithm in a software medical device could miscalculate a drug dosage and cause harm to a patient, and we have already seen the fatal consequences of driverless cars failing to detect pedestrians. The question arises - does the traditional Product Liability framework apply to software in these scenarios?

In this market briefing Michaela and Deirdre considered how software can be considered a product, the subsequent applicability of the product liability framework, difficulties with claims arising from 'software as a product' and issues the insurance industry need to consider when determining the potential risks and identifying the appropriate policy coverage.

By the end of this lecture members would have gained into:

• Whether software can be considered a product and how the product liability framework might apply
• The types of risk presented by software as a product and what types of insurance policies will be involved
• What this means for re-insurance and the issues which re-insurers will need to be mindful of

Chair:
Jennifer Braney, Cyber Broker, Capsicum Reinsurance Brokers LLP.

CPD events are open to CII and PFS members
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Contact:
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