Demand for product recall insurance is set to spiral in the new year
A leading insurer is predicting an increase in demand for product recall insurance following the introduction of new European rules.
According to AIG Europe (UK) the application next month of European Commission (EC) Regulation 178 for Food Safety looks set to increase demand for product recall insurance.
It will require UK food companies to immediately withdraw or recall any food which they have imported, produced, processed, manufactured or distributed that they consider may not be compliant with the EC's food safety requirements. Common reasons for recall may be accidental contamination, malicious tampering, mis-labelling, and product extortion.
Companies will not only be required to immediately recall the products, but they will also have to inform the relevant authorities that they are instructing a recall -- a procedure which is not currently necessary, says AIG.
In addition, it will be compulsory for European Union member states to report withdrawals or recalls into the Rapid Alert System (RAS). The system is overseen by the EC, alerting authorities in each country about any serious recalls. Currently, there are approximately 15-20 recall alert notifications a week, which is set to rise from January when it will become mandatory to inform the RAS.
"The introduction of the Regulation in January, will effectively force firms to consider what, if any, procedures they have in place to deal with a recall situation," says Neil Evans, vice president, Crisis Management, AIG Europe (UK). "Product recall insurance can help when these situations arise, not only in a financial sense but from a crisis management perspective, by assisting companies in diligently recalling all affected products."
In response to industry concerns over this legislation, AIG Europe (UK) and RQA Europe, specialist product recall consultancy, have been holding a series of training seminars across the UK to assist food companies to understand the implications of the regulations.
