This policy provides cover for situations where it is necessary to withdraw a product from the market.  This may occur due to the detection of a dangerous fault after the product’s manufacture and distribution.

All manufacturers, importers and retailers must adhere to the EU General Product Safety Regulations. These regulations impose various rules to ensure that products are safe for consumers. Under these regulations any concerns with regard to safety can be reported to the authorities and necessary action can be taken.

Within many sectors of the UK authorities are able to enforce a recall.

Due to the colossal use of social media worldwide, any issues that an individual may be experiencing with a product can reach public knowledge within a fairly short time period. This has resulted in product recalls occurring more and more frequently in recent years.

A recall situation must be dealt with in the most proactive and professional manner possible, taking into consideration the effect on both the brand itself and all parties involved.  This is to ensure the best possible outcome for the company’s brand, which could range from a dip in sales, right down to a particular brand ceasing altogether.

The relevant underwriters selected should of course provide the appropriate financial security ratings but in addition, they will also be able to take a flexible approach to cover. This means that they will have both the ability and capacity to extend their wording to meet your specific requirements.

Some of the risks covered by this policy are as follows:

  • Cost of the recall
  • Cost of replacing the defective products
  • Consultants and advisors costs
  • Pre-recall expenses
  • Business interruption/loss of gross profits
  • Brand rehabilitation costs
  • Defense costs
  • Third-party recall costs – coverage generally applies to the firm itself, though additional coverage can be purchased to cover the costs of third parties
  • Product extortion demands
Food, Drink, Pharmaceuticals and Cosmetics Consumer Goods

There are various circumstances whereby accidental food contamination can occur. This does happen frequently in the UK and can occur from simple omissions of mislabelling or formulation errors to the introduction of microbiological contamination, viruses, chemicals or foreign objects.

There are of course circumstances whereby cosmetics and medicines are vulnerable to contamination from similar causes. However, within this category the error could result in fatal consequences.

There are situations whereby there is deliberate contamination and malicious extortion. These sorts of cases happen less frequently but are far more heavily publicised.  As a result, the consequential damage for the company can be magnified and can have far worse long terms implications.

Product recalls are also becoming more and more common for consumer goods. These can be a result of various dangers from overheating and shocks from electrical products. Other dangers that can warrant a recall are where small parts become detached from a product and can create a choking hazard risk.

In all of the above circumstances, insurers will look to put in place good risk management procedures to cover the risks associated with Product Recall. To ensure that the most appropriate cover can be written, it is prudent to provide the insurer with any recall plans, quality assurance manuals and crisis management plans. This will enable insurers to underwrite bespoke policies based on the risks that are considered important to the organisation, if such circumstances were to occur.

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