GMO Liability: Options for Insurers

Abstract

If a traditional farmer suffers a loss of income due to unwanted cross-pollination, insurance coverage of such a loss might theoretically involve different insurances of the affected parties, depending on the liability structure of such losses: the commercial third-party liability insurance of the GMO farmer, the product liability or recall insurance of his supplier, an agricultural insurance against material damage of the traditional farmer or, if the cross-pollination was only discovered after the genetically modified (GM) products had been passed on to customers, the product liability or recall insurance of the traditional farmer. However, determining the existence of coverage for each of these types of insurance is problematic for a variety of reasons. In addition to this, GMO cross-pollination losses are usually explicitly excluded from insurance coverage due to the incalculability of associated risks, particularly in countries with stringent liability laws governing GMO farmers that are independent of proof of causality. Two alternatives for settling such cross-pollination losses sustained by traditional farmers have been developed in practices parallel to insurance solutions: variously organised and financed compensation funds and also contractual constructions under which the seed producer obligates himself to buy any plants of farmers in the neighbourhood of the seed producer’s customers affected by unwanted cross-pollination at the price of not genetically modified crops.