Partner, Global Head of Recall Practice Group
Tougher regulation has made product recall rife. Even as regulators wield higher fines, many consumer-facing industries – food and drink to pharmaceutical, as well as consumer goods and automotive – often overlook recall insurance. Some businesses only focus on the cost to retrieve the products, which can be as little as 5% of the overall expense, or think they can recover costs under another insurance policy and then find they can’t.
In a recall situation, there is more at stake than just the cost of recalling the product such as the loss of gross profit because the products can’t be sold. There’s also the cost of campaigns such as special offers to restore sales after a recall as well as the cost of crisis consultancy to rebuild consumer confidence. With the right insurance coverage though, you can protect your balance sheet and your reputation.
We enable you to pre-empt sector-specific risks and prepare for what is a complex claims process by, for example, recording your accounting data in a format that can show you’ve suffered a financial loss. We can also review contracts from your clients to make sure your insurance policy covers your obligations to them.
The Lockton Product Recall broking team has extensive experience which enables for a better understanding of a clients needs, exposures and insight in to the most advantageous market for their requirements both in the UK and abroad.
When global appliance controls designer-manufacturer Robertshaw became concerned about their insurance, including the product liability and recall advice they’d had from their existing broker, they called in Lockton. We audited and reviewed all their programmes and discovered non-concurrent structures, 30-plus gaps in property placement and a series of other flaws. We then set out to restructure their programmes, this time using the right language. Altogether this saved the company over US$1.25 million – more than double the saving they’d expected*. And we filled the gaps and fixed the flaws, giving them coverage for financial loss, for the first time ever, and halving their retention.
*the scope of the broking exercise will depend on and be tailored to your circumstances and in accordance with law and regulatory requirements. Premiums, coverage and any savings will likewise be dependent on your circumstances and underwriters acceptance of risk.