Businesses could be facing a future liability crisis if they do not face up to growing litigation issues, warns insurance market specialist Lloyd’s. In its report ‘Directors in the Dock – is business facing a liability crisis?’, businesses are urged to prepare for future liability risks. Lloyd’s research has shown that boards are feeling increasingly challenged by litigation and are spending more time and money addressing these issues. Product recalls are now a daily occurrence, rising 50% in Europe in the last year. Shareholder activism is on the rise, operating environments are becoming ever more complex and new legislation, such as the Corporate Manslaughter Act, is increasing risks. The report found that there is a growing concern among business leaders about the rise of a US-style compensation culture in Europe and Asia and the liability fallout from the current instability in the financial markets. Lord Levene, chairman of Lloyd’s, said: “An increase in litigation and the fear of potential liability issues are impacting customers through a rise in the cost of products and services and also stifling risk-taking amongst boards who are missing out on new opportunities.”
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