A Gallagher specialist has highlighted the importance of product recall insurance for food producers at a recent industry workshop.
Stephen Elms, Gallagher national head of food production, was a presenter and panelist at the Queensland Intensive 2019 Under the Magnifying Glass workshop, hosted by the Australian Insurance Law Association, on the legal and insurance issues involved in product recalls.
“Damage mitigation is the overriding goal where product recalls are concerned,” Elms said. “Being able to cover off a program of required actions is essential to riding out a crisis, like the strawberry needle contamination.”
Some of the costs involved in a product recall include recall costs, including customer and retailer recall costs, replacement, business interruption, rehabilitation expenses, extortion (if applicable), consultants' and advisers’ fees, and fines and penalties.
Gallagher said negligence or accidental contamination involving food products may bring about intense public and media reaction, and the way the company’s management deals with the recall can have a dramatic effect on whether the business fails or rebounds.
“Having a widely recognised recent example of a dramatic malicious tampering case helped bring our various perspectives – broking, underwriting, and claims – vividly into focus,” Elms says. “It’s also helpful to look at the integrated picture, how the elements come together and what the larger implications are. No one wants to have to deal with a product recall, but if an incident occurs you need to be prepared and you need to be protected. That’s what product recall insurance is for.”
