10 Things to Know About Product Recall

1. The food and beverage sector continues to see pressure on pricing of product contamination coverage, following a number of new carrier markets opening in the past 12 months. —John Turner, head of U.S./Canada Product Recall for XL Catlin
2. Food and beverage manufacturers continue to face increasing risk headwinds from both an operational and regulatory risk standpoint. By way of an example, new genome sequencing technology is a game-changer and has improved regulators’ abilities to quickly trace foodborne illness from sickened consumers back to the source. What used to take weeks and cost thousands of dollars now takes around 30 minutes and costs $50. —John Turner, head of U.S./Canada Product Recall for XL Catlin
3. The consumer product industry is seeing an increase in demand from retailers and brand owners who are contractually obliging manufacturers to buy specialist recall insurance coverages. This sector is not alone but has traditionally lagged behind the food and beverage, and auto component sectors on this requirement. —John Turner, head of U.S./Canada Product Recall for XL Catlin
4. The Food Safety Modernization Act continues to be a challenge for companies as they review their supply chain and try to determine if they can trace all ingredients back to the source where contamination may occur. —Darren Austin, vice president/senior risk consultant, Risk Services Division, HUB International
5. Foreign material is the largest cause of recalls in the food and beverage sector. —Darren Austin, vice president/senior risk consultant, Risk Services Division, HUB International
6. Food and beverage companies should have a qualified individual onsite to develop written food safety plans. These written plans and staff training to identify items such as plastic, wood, bone, etc. and empowering them to shut down processes immediately can help reduce a potential recall. —Darren Austin, vice president/senior risk consultant, Risk Services Division, HUB International
7. For the fourth consecutive year, the number of U.S. automotive recalls rose in 2014, the latest year for which final figures are available. Even more concerning is that statistics from the National Highway Transportation Safety Administration showed an almost three-fold increase in the number of recalls over the prior year, from 22.1 million in 2013 to 63.95 million in 2014. —Bernie Steves, managing director of Aon Risk Solutions’ National Crisis Management Practice
8. The size or severity of a loss may be more dependent upon the handling of the media and public perception as opposed to the size of the recall itself. Projecting the exposure to a product recall or contamination can be a difficult task for the company at risk and underwriters. —Bernie Steves, managing director of Aon Risk Solutions’ National Crisis Management Practice
9. Building a proactive social media plan is an essential part of a product recall defense strategy. Social listening and monitoring software is available to assist companies. Integrating a company’s public relations, consumer affairs, and product safety and quality teams can help mitigate risks and rebuild trust with consumers. —Bernie Steves, managing director of Aon Risk Solutions’ National Crisis Management Practice
10. The definition of a product recall in an insurance policy can vary. A key consideration is that the definition consider: the way a recall could operationally manifest itself; what regulations drive and affect the recall process; and how contractual considerations modify obligations and the financial outcome. —Randy Crawford, National Industrial Practice leader, USI Insurance Services