The Tobacco Industry and the Risks of Litigation

1
The Tobacco Industry and the Risks of Litigation

• Jesse Anderson
• Fred Batts
• Danielle Dugan

2
Introduction

• Tobacco Companies Will They Make Claims?
• Litigation Aversion Is Demarketing the Answer?
• Advisement to Risk Managers of Tobacco Companies

3
Insured or Self-Insured?

• Current Stance Self insured.
• Insurance policies do exist.
• Claims made or Occurrence Policies

4
Demarketing

• Definition The deliberate attempt to induce
  consumers to buy less of a product
• Past attempts
• 1890-several states prohibited sales
• early 1900s-educational campaigns launched
• 1950s-focus on link between smoking and lung
  cancer
• 1966-warnings placed on cigarette packages
• 1971-advertising banned on TV and radio

5
Recent Demarketing

• Public Service Announcements
• use fear appeal to associate smoking cigarettes
  and lung cancer to persuade consumers not to
  smoke
• Action Against Access
• a comprehensive voluntary program to help prevent
  minors from having access to cigarettes

6
The Initiatives of Action Against Access

• Place notices on products which say Underage
  sale prohibited
• No free samples
• No mailing cigarettes to consumers
• Denying merchandising benefits to retailers who
  are fined for or convicted of selling cigarettes
  to minors
• Preventing the use of brand names or logos on
  items marketed to minors

7
the initiatives Cont.

• Assisting retailers in complying with minimum-age
  laws
• Seeking state legislation to prevent access to
  cigarettes in vending machines
• Supporting the posting of minimum-age signs in
  retail outlets
• Seeking state legislation to require sale of
  cigarettes under direct control of clerk
• Retail licensing requirements in 50 states

8
Future Demarketing

• Health advocates pushing for manufacturers to
  provide a list of ingredients and additives for
  cigarettes
• FDA expected to propose regulating tobacco as a
  drug

9
Advisement To Risk Managers

• Disseminate Information Early
• Forge Alliances
• Organized Labor
• Suppliers of Raw Materials
• Create Socioeconomic Utility
• Tobacco VS Alcohol