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Abstract:
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The Danish Workers Compensation Scheme (WCS) is an employer-financed insurance that covers
workers losses due to occupational injuries. If the worker is injured due to a defective product he
may claim compensation under the Danish Product Liability Act (PLA), but only to the extent he
has not and will not be compensated by WCS. WCS insurers are not subrogated into the claim of
injured worker and accordingly cannot seek recourse from the liable producer.
At first glance, this setup means that producers of products used exclusively in the workplace have
inefficient incentive for designing and manufacturing non-defective products. However, other
factors influence the optimal regulation of liability and the initial inefficiency may therefore be
questioned. Does the prospect of liability really create incentives? Is liability needed when WCS
ensure workers compensation? Is liability needed when there is safety regulation, regulatory
monitoring and criminal sanctions in place? Does the deterrent effect of liability outweigh its
inherent administrative costs?
PLA is the result of the Product Liability Directive issued by the EU. Denmark is under an
obligation to ensure conformity between the Directive and EU-law on one hand and PLA and
related legislation on the other hand. For products used exclusively in the workplace, the Danish
setup in effect transfers the liability from producers of to Danish employers whose insurance
premium will include the expected cost of injuries caused by defective products. Questions may be
raised as to the conformity of this solution.
This thesis explore the above mentioned issues in order to determine if the current system of
interplay between WCS and PLA ought to be changed, allowing insurers to be subrogate into
injured workers’ claims seeking recourse from liable producers. It is shown that a prospect of
liability will bring about efficient safety benefits even with current safety regulations, monitoring
efforts, criminal liability and market forces in place. Furthermore an analysis of the applicable EULaw
also implies an obligation on Denmark to change the current system. |
