AVR-Chat

On Saturday 03 September 2005 06:19, John Samperi wrote:

> This is when you need professional indemnity insurance. A friend
> of mine almost had a heart attack when he checked his insurance
> and found out that he did not seem to have professional indemnity
> insurance.  (he designs and manufactures his own products)

> So far it seems that only GIO, NRMA and CGU seem to offer the
> above types of insurance in Australia.  ABBI does not offer any
> insurance for electrical engineers or anything else that has to do
> with electricity.

Insurance companies are very conservative at accepting your risks.
You have to pay them exhorbidant amounts to accept what are in
reality; tiny risks. The justification they use is that they have to
cover themselves against being sued.

I enquired about professional indemnity insurance (PII) when
starting my business (6 years ago) but it was then too expensive
(more than what I envisaged to be my salary) for what I wanted to
do.  They have in effect; stifled innovation. It doesn't hurt me
financially not to do what I wanted to do; but it doesn't serve
society as well as it could.

When I first worked as a Professional Engineer, my employer at the
time thought it would be a good idea for *me* to pay for the
newly-invented PII, which then worked out at around quarter of my
salary (back in the mid 1980's).  After a day of thinking about it I
would be happy pay on the proviso that I be contracted as a
Consultant Professional Engineer for the same number of hours (50 to
90/week at the time) at market rates.  I was "surprised" that the
employer then accepted the PII risk in their corporate product
liability policy.

The software industry has huge disclaimers with which we're all
familiar. In practice, most of the disclaimers are probably void.
Unless the end-user explicitly accepts (in writing) that the product
performs as specified and accepts the consequences of software
failure, then the product liability issue remains with the vendor.
Any warranty (liability) is AT MOST limited to rectification of the
software; up to the value of the purchase price.

Fortunately for other software vendors, end users have become
accustomed to software that doesn't work reliably at all, so any
claims will have to be rather non-trivial to be successful.

> I would very much appreciate your views, experience, knowledge,
> etc. and which insurance companies you deal with apart from the
> above.

I do my business insurance through a broker, but check that their
policies cover what's needed and that their fees are competitive.
I've heard of some brokers steadily increasing their margin with
their "steady customers".

My view on PII is that it is actually a positive feedback system.
It encourages "profit through litigation" operators to engage the
services of well-insured incompetents to make products which are
inherently less safe (and btw efficient, reliable, etc) than they
could be; and then lurk until somebody gets hurt or killed.

> If only I knew all that is required to run a business 15 years
> ago.....

You wouldn't have started!

-- 
/"\ Bernd Felsche - Innovative Reckoning, Perth, Western Australia
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