Recalls are on the rise, yet approximately half of companies in key consumer industry segments lack proper risk management. Without it, a recall can push a successful company into a downward spiral that may be impossible to reverse.
The price of reputational harm is even higher, with companies struggling to restore their brand images after losing their customers’ trust. Many companies assume that their property and casualty (P&C) policy covers a recall. It doesn’t, and the increasing likelihood of a recall is a wake-up call.
What’s Behind the Recall Climb?
Even with the increase in recalls, insurance capacity is ample and carriers are currently competing vigorously on price and breadth of coverage. Recognizing the continued growth potential of recall insurance, many new insurers are entering the market eager to play a role. Where there were five markets a few years ago, there are now more than 15.
Yet, the favorable rates may not continue, given that losses are on the rise. Now is the time to find the right carrier, buy a policy, and build the relationship. When meeting with potential carriers, building trust in the embedded quality culture and crisis planning is likely to yield positive results.
Read my additional recall resource which covers:
- Clearing up the Confusion About Coverage
- Recall Frequency vs. Severity
- Food Industry Segmentation
- The Right Recall Protection Can Save a Company
Any company with exposure to brand damage needs the protection of a recall policy that will help it recover from an incident, restore its image, and return to profitable business operations. Lockton can assist.
1 Grocery Manufacturers Association, “Capturing Recall Costs: Measuring and Recovering the Losses” (October 2011), http://www.gmaonline.org/file-manager/images/gmapublications/Capturing_Recall_Costs_GMA_Whitepaper_FINAL.pdf