Product recalls occur daily across the world. The past decade has seen the instances of high profile recalls rise for a number of reasons including:
- more stringent regulatory requirements from bodies such as the FDA;
- advanced pathogen detection and;
- the need for companies to protect their brand’s reputation.
Companies can invest vast amounts of time and money in pre-mitigation strategies, but recalls still occur due to unforeseen manufacturing errors, contaminated ingredients and accidental or malicious acts. Many companies remain uninsured and often bear the cost of recall expenses, business interruption and legal fees when in fact these consequences could be mitigated through the purchase of insurance.
Product Recall or Contaminated Product Insurance (CPI) is a first party insurance product that protects against financial loss resulting from an insured incident. However, unlike standard liability coverage, it does not require a third-party law suit or other legal proceedings to trigger a claim.
CPI insurance is not only applicable to large companies. CPI coverage should be considered by SME’s who often have lower volume, more centralized production processes and rely on a number of key suppliers and distributors than their larger counterparts. A recall event can cause significant interruption. The suspension of production and suffocating costs to get back up and running can have a detrimental impact on a company’s bottom line.
A loss of a single major contract can financially ruin a small company. In a competitive marketplace, a client will often pull these contracts if a recall is badly handled. Larger brands often become targets for malicious tampering as they attract great media coverage, but it is also disgruntled employees who have been known to cause serious issues for smaller companies.
For all these reasons let Safeonline help you: in times of crisis you know you can rely on the protection afforded by an insurance policy and the crisis management resources available.
In an ever-changing digital world, where the supply chain is incredibly complex and the risks facing companies vary both internally and externally, a responsive insurance solution that reflects individual business needs is required. Social media for example, is an important variable that companies have to carefully manage during a recall and news stories can be shared online thousands of times before the company has even had a chance to respond.
Safeonline is an insurance broker who understands these exposures and uses its expertise to find the right product recall and contamination insurance solution to fit every company’s need