Delta Insurance has released a new whitepaper on food safety risk following its introduction of a new insurance offering for food manufacturers.
According to Delta CEO Craig Kirk, food manufacturing accounts for a huge 71% of New Zealand’s manufactured exports, and the industry overall is worth approximately $7 billion – a figure predicted to quadruple by 2025.
He says Delta has seen an “alarming” rise in risks for food producers, and the number of food recalls per capita for New Zealand has been significantly higher than in Australia. This includes a rising prevalence of allergens, mislabelling, contamination and intentional criminal activity – one example being the needles intentionally inserted into Australian strawberries earlier this year, which led to approximately $12 million in crop being destroyed.
Kirk says that although the risks have been rapidly rising in this space, the insurance sector has not been keeping up.
“We could see that existing general liability insurance in the market fell well short of covering the potential risks and damage to companies that could arise from a major food issue,” Kirk explained.
“The damage in terms of cost and reputation from a significant food crisis or major issue doesn’t just affect the company concerned; New Zealand’s reputation as a high-quality food producer also suffers.”
Delta’s food manufacturing liability insurance product has been introduced to protect against the risks which standard liability policies largely do not cover. According to underwriting manager Dinesh Murali, the idea that general liability policies cover food recall risks is actually a common misconception, and the cover is often limited at best – something which could cost manufacturers dearly if things go wrong.
“Our food manufacturing liability policy is aimed at providing cover which is normally not covered under your standard general liability and statutory liability policies,” Murali explained.
“Examples include food recall costs, the replacement costs of the food that was recalled, direct financial losses to manufacturers’ customers (both retailers and wholesalers), and gradual pollution – these are all normally excluded under your standard general liability coverage.
“While these covers can be sourced individually, they are quite a niche offering which tends to be uneconomical for SMEs as they find it hard to justify it in their budget.”
The food manufacturing liability policy is the latest in Delta’s line-up of niche products aimed at plugging significant gaps in the insurance market.
