Product Related Issues and Risk Financing Facilities

Risks related to "your product" (which, for the purposes of this quick post, is a product made by the insured or work performed by the insured) are excluded from the standard ISO CGL policy (please see here, here, and here).  

As of this writing, Boeing is experiencing problems related to their product.  Several countries have banned one of their airplanes from service due to several recent crashes. 

This situation highlights several risks that are typically financed by a risk financing facility or "captive insurer."  These include:

1.) The liability related to the product
2.) The cost of public relations damage to the company
3.) Some of the lost income caused by the problem
4.) The cost of recalling the product from the market
5.) Legal expenses related to the incident.

For companies that make a product and place it into the "stream of commerce," a captive might make sense.  

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