MMA Blog

Proactive planning can save a business from a food recall

There is no doubt that food recalls are getting more common. Recalls of romaine lettuce seem like an annual occurrence. Around Thanksgiving the onion recall of 2021 concerned families around the country when reports of the salmonella outbreak from tainted onions hit the national and local news. Scrolling the FDA’s Recalls, Market Withdrawals & Safety Alerts webpage on any day, the list of food and other recall appears never-ending.

The total number of food recalls in the U.S. increased by 10% between 2013 and 2018, according to a 2019 report by Public Interest Research Group (PIRG). Today, by all observations the rate has not slowed, and defective product problems have generated insurance losses in excess of $2 billion in the last five years.

Unfortunately, many businesses underestimate the impact of a product recall. Oftentimes, business owners or managers assume that they are protected, either because their product is embedded in a larger company’s product or they assume they are covered by their general liability policy. Neither is true. Food producers and manufactures of all sizes should be prepared in the event of a recall.

Product liability coverage may cover businesses in the unfortunate case of death or severe illness caused by a recall, but product liability does not cover the many additional costly expenses when a recall occurs. Just as producers proactively plan and mitigate safety hazards to prevent outbreaks, having a plan in place for a product recall is a solid business practice. To start, follow these steps:

  1. Review your liability policies to understand fully what is and is not covered in the case of a product recall.
  2. Understand third-party risks:
    • How do you afford to recover your product from grocery shelves?
    • How do you reimburse grocery stores and suppliers for the lost shelf space?
    • How do you manage your reputation with vendors and customers? Are you equipped to deal with bad press or social media interactions?
  3. Work with an expert to help you assess your risk and plan.
  4. Consider a specialized product recall policy.

Having a team in place to help assess a food producer or manufacturer’s individual risks and the best solutions can be extremely beneficial to managing a product recall, so it doesn’t shut down business.

MMA Insurance, a Marsh & McLennan Agency, offers the expertise of Marsh’s Product Recall practice, a leading industry practice that has demonstrated unmatched proficiency in loss mitigation strategies and full-service claims support. Learn more.

Kyle Womach is a commercial insurance sales executive and risk manager. Prior to joining MMA, Kyle spent his career in the tree fruit industry specializing in employee relations, food safety and packinghouse operations. His passion for agriculture stems from growing up on a family farm and witnessing the dedication and hard work it takes to feed the world.

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