Tobacco Woes Could Hit Auto Industry

The automobile industry could be the next to face multi-billion dollar class action law suits like those tobacco firms agreed to pay US$368.5 billion to avoid, a top insurance executive said on Thursday.

The motor industry has only been saved because the legal eagles have zeroed in on the tobacco industry, said Praveen Gupta, Hong Kong manager of the New India Assurance Co Ltd. Tobacco is harmful to health. Dont we know that about the car already? We have the information that shows it, Gupta told an insurance conference.

He said tobacco firms had been forced to agree to the tentative settlement of the massive claims because their products were shown to be harmful. Toxic exhaust emissions like carbon monoxide, lead and benzene left auto manufacturers exposed, Gupta said. The case against the tobacco industry has parallels with growing concern about exhaust emissions and how the auto industry is being forced to react by governments and consumer lobbies, Gupta told Reuters after his speech.

 

Independent reports have for years established links between exhaust emissions and their harmful effects, which have led to the industry being compelled to make modifications to engines, exhaust systems and fuels. Effectively, auto manufacturers were making products they knew to have potentially harmful side-effects.

Couldnt we have a product liability suit against the motor industry for the damage the car does to the environment, Gupta said. We have lessons to learn from the tobacco industry, he said, adding that consequences for insurers would be huge if they were not proactive.

BAT chief flays tobacco deal: Page 13

Gupta said insurers would inevitably be seen as a source of revenue in any action or settlement deal and that the industry had to decide what sort of cover, if any, it was prepared to provide.

The potential problems are alarming and insurers will be expected to pay out again, Gupta said.