The Uneasy Case for Food Safety Liability Insurance

Abstract

Foodborne illnesses sicken millions and kill thousands of Americans every year. Our dysfunctional government food safety system appears incapable of protecting us, leading some to look to the private market for solutions to our food safety crisis. One private market approach, food safety liability insurance, is gaining popularity. This Article questions the emerging view that liability insurance can supplement government regulation of food safety. This article takes a more comprehensive approach than previous scholarship by systematically addressing the shortcomings of liability insurance as a regulator of food safety from three distinct perspectives: (1) an economics of information framework, (2) an analysis of the empirical evidence of underdeterrence of foodborne illness by the tort system, and (3) a review of emerging evidence of food suppliers’ cognitive biases with regard to food safety. Combined, these three methodologically distinct approaches strongly suggest that food safety liability insurance is a weak regulator of food safety.

Keywords: insurance, liability insurance, food safety, foodborne illness