Global product recalls could result in larger and more complex losses for businesses than ever before, warned AGCS in its Global Claims Review: Liability in Focus. The food and drink sector was particularly exposed to recalls, it found.
In Europe the number of food and drink recalls/notifications in the fourth quarter of 2016 increased by 12% to 787 – the highest for two years.
AGCS also reported that claims had increased by 65% in Europe between 2011–2015. As of last September, claims for 2016 were on course to equal or surpass 2015.
Largest cause of liability loss
Overall, the report identified defective products or work as the largest cause of liability loss for businesses, accounting for near to half (43%) of the value of all claims in the UK.
The average value of a defective product/work claim in the UK was more than £312,000, with the cost of product recalls being a major driver.
“The number of recalls in the pharmaceutical, engineering, food, automotive, electronics and energy/utility industries has been steadily rising with increased focus on product and workplace safety, as well as more proactive regulation,” said Stewart Eaton, head of product recall for AGCS Regional Unit London.
Referring to the food and drink recalls, he said: “Growing supply chains, tightening of safety regulations and faster dissemination of information are all factors in the increasing number of incidents, which can have a devastating impact on a company’s reputation.
‘Protect businesses against financial losses’
“However, if a recall is professionally managed it can help to minimise damage. Contaminated products insurance can protect businesses against financial losses resulting from the recall of a product following either accidental or malicious contamination.”
In the future, digitalisation and the growing use of new technologies were likely to lead to a further shift in the liability risk landscape, he added.
Meanwhile, don’t miss Food Manufacture’s 2017 food safety conference: ‘Food safety 2020: preparing your business for change’, which will offer practical advice on how to avoid a product recall.
It takes place at the Woodland Grange, Leamington Spa on Thursday June 22. Click here for more details.