Actuarial Science Experts Opine on Alleged Breach of Warranty Terms by Heavy Equipment Manufacturer

Case Overview

This case involves a manufacturer of industrial heating and cooling equipment used in the food processing industry. The manufacturer had been accused of supplying defective merchandise to a number of customers in violation of Federal Lemon Laws, causing clients to form a class action against the defendant firm. According to the plaintiffs, the defective equipment should have been under warranty when it began to fail, but that the defendant firm did not honor the terms of the warranty when customers began to report issues with the equipment. In order to evaluate the company’s obligations under the terms of their warranty agreement, an actuarial specialist was requested.

Questions to the Actuarial expert and their responses

Please explain why you're qualified to assist with this engagement.

I am a fully credentialed casualty actuary and I have dealt with warranty claims a fair amount during my career at EY, Coopers & Lybrand, and Towers Watson both through audit and independent actuarial engagements. My warranty experience spans valuations for such diverse products as jet engines, meters and measurement devices, cell phones, replacement windows, automobiles and roofing products. I believe that, along with my co-authors, I have written the quintessential paper on warranty valuation as well. I note that I was the principal author of the paper as all the methodologies cited were based on my directives as well.

Have you ever conducted studies pertaining to defective products?

My warranty experience spans valuations for such diverse products as jet engines, meters and measurement devices, cell phones, replacement windows, automobiles and roofing products.

About the expert

This expert is currently the lead Actuarial Consultant for MJB Actuarial Solutions, LLC. He has 37 years of experience in the insurance industry. He has worked extensively in most areas of property and casualty insurance and reinsurance, mergers and acquisitions, self-insurance and captive insurance companies. He has advised extensively with many of the major insurance and reinsurance companies as well as large self-insured entities throughout North America in the areas of loss reserving, pricing and risk management. He had been a partner running actuarial practices at both Ernst & Young, where he ran the national P&C actuarial group and Coopers & Lybrand, where he ran the Northeast P&C actuarial practice. He also has varied experience in actuarial functions at two major property & casualty insurance companies, running both personal lines (auto and homeowners) and commercial lines ratemaking and reserving units. He has published on warranty products and he worked on a variety of warranty actuary projects for Owens Corning.

E-010242

Specialties:

Actuarial