FDA says cloned food safe, but could lead to non-covered claims

Products from cloned animals, such as milk and meat, may be safe to eat, but that doesn’t mean there aren’t insurance risks. The problem is that it’s somewhat too soon to tell what claims could arise, and potentially no coverages available, according to insurance industry experts.

Recently, the U.S. Food and Drug Administration issued three documents on the safety of animal cloning, including one that finds that there are no health risks involved in eating meat and milk from cloned animals versus eating such products from conventionally bred animals.

“Based on FDA’s analysis of hundreds of peer-reviewed publications and other studies on the health and food composition of clones and their offspring, the draft risk assessment has determined that meat and milk from clones and their offspring are as safe as food we eat every day,” said Stephen F. Sundlof, director of FDA’s Center for Veterinary Medicine, stated. “Cloning poses no unique risks to animal health when compared to other assisted reproductive technologies currently in use in U.S. agriculture.”

The FDA believes there are no health risks because “cloning is not the same as genetic engineering, which involves altering, adding or deleting DNA; cloning does not change the gene sequence.”

“Cloning involves taking a cell from an animal with positive traits, such as general good health, then using the DNA in that cell to duplicate the good traits in an animal known as the clone,” according to the Farm Bureau Federation Web site. “In addition to minimizing diseases in livestock, cloning also can be used to create more productive animals with desired meat characteristics. It could even help save endangered species from extinction by banking cells for use later on, in case their numbers dwindle.”

While cloning may be useful for saving species, when it comes to cloned food, the public may react differently based on emotions versus science, acknowledged Lynne Finnerty, editor of FBNews, a publication of the American Farm Bureau Federation. A recent Federation poll indicated that 64 percent of consumers are uncomfortable with animal cloning, Finnerty said in a statement.

And therein lies part of the problem, said Marjorie L. Segale, vice president of Huntington Beach, Calif.-based Insurance Skills Center Inc., who teaches a course on genetically modified crops. Public emotions would come into play, causing potential economic losses but minimal insurance coverage response, Segale said.

In general, when it comes to claims resulting from cloned animals, the insurance areas of concern in the United States would deal with product recall, loss of income and labeling claims, Segale said. But if there is an emotional distress-related claim, if it’s not linked to bodily injury, there really is no coverage in a liability policy, she said.

Assume an example in which a person eats an animal product derived from a cloned animal and gets sick. When the person files suit, it becomes a bodily injury claim that should be covered under a general liability policy, Segale noted.

However, one concern about the FDA’s recent announcement, she said, was that the agency indicated no special labeling was needed for cloned animal products. “One of the issues we worry about is where we do not legally require labeling, a claim may come in as more of a ‘failure to warn,’ which could invoke strict liability arising out of a product,” Segale explained. The defendant will rely on FDA guidelines that say it didn’t have to label the cloned products. On the other hand, “the plaintiff does not have to demonstrate negligence,” she said. And when claims are based on emotional rather than a logical response, it often creates costs for the party being sued.

When the injured person tries to link the injury to the product, that could spark a product recall. Generally, product recall coverages help policyholders to weather the storm as sales disappear in the marketplace and the problems get sorted out.

Yet because the meat from cloned animals could be mixed with meat from hundreds of other conventionally bred animals, even if there’s no harm related to cloning, if there’s a product recall and it hurts ranchers’ sales, “there’s a pure economic loss without coverage under the general liability policy or under a products recall policy,” Segale said. That becomes a problem for the slaughterhouse and ranchers raising the meat, because there’s no harm provable, so no coverage, she said.

In the absence of any specific policy exclusions — which Segale said have not been developed yet because of the newness of the issue — there might be a defense response where the insurer helps to pay for defense litigation, she added.

The FDA is accepting public comments on its draft documents on the safety of animal clones until April 2. To submit comments or view the draft risk assessment documents, visit www.accessdata.fda.gov/scripts/ oc/dockets/comments/commentdocket.cfm?AGENCY=FDA.

Written comments may be sent to: Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852. Comments must be received by April 2 and should include the docket number 2003N-0573.

For information about cloning in general, visit www.clonesafety.org, which has links to many of the studies that FDA considered in making its no-labeling requirement decision.