Could your business survive the effects of product recall symptoms?
A product recall or withdrawal can be the most dangerous thing that can happen to a business. Its effects can rock production profits all over the world – a great number of products are being recalled across Europe, every week. Can your business afford to take that risk?
Citynet Insurance Brokers are renowned in the market for their expertise and are leading suppliers of specialist liability products. They fully understand that handling the fallout from a product recall event can be a worrying prospect for businesses, and urge business owners to make sure they have the correct measures in place that will help safeguard against product failure. Often, a typical policy will consist of:
- Product guarantee (covering the costs of removing, replacing or repairing failed products),
- Financial loss (including third party costs who have suffered as a result) and;
- Product recall (the costs of recalling the products if they have failed to perform their intended function, or have caused bodily injury and/or property damage).
Citynet’s expertise can be shown in offering bespoke solutions which can cover not only the three points above but also additional covers such as malicious tampering, brand protection, and pre-crisis consultancy. Citynet’s assistance in sourcing the right policy with the correct cover can help businesses recover quickly if they need to recall a product – something that can spell bankruptcy for many small businesses.
Tim Hicks, Head of Schemes and Specialty Risks at Citynet said: “Companies providing products have a responsibility to their customers to ensure their products work and are safe, however, we all understand that mistakes can happen. Recalls, whether caused by accidental or malicious contamination of products, can potentially keep businesses awake at night if they don’t have the correct insurance in place.”
“If there’s something wrong with a product, consumer reactions tend to flare… and when emotions are in play the ‘domino effect’ can take place – this is how smaller businesses can really take a hit as reputation makes a significant contribution to their success. If a product fails to perform its intended function, it can not only devastate a company’s brand name but also its profitability resulting in an increased pressure on companies to retrieve faulty products and rectify the problem.”
This ‘domino effect’ is amplified now more than ever, as reporting faults via the internet and social media can devastate brands overnight. A food sabotage case in Australia (where needles were found in strawberries) caused a scare among consumers and cost the industry hundreds of jobs. In another incident, a meat producer recalled over 130,000 pounds (around 60,000 kg) of ground beef due to E. coli contamination.
Although a product recall can damage reputation, it doesn’t necessarily mean the end of a brand. If managed correctly, it can show to customers that the company is responsible, and this can restore trust.
Whether you are a manufacturer, wholesalers or retailer, the risk increases as the supply chain grows more complex (and new legislation is put in place), so when a product fails, the management of the event is critical to softening the blow as a result of recalls or liability claims.
Unfortunately, many manufacturers are exposed to large recall events because they choose to only purchase products liability cover which will ordinarily exclude cover for claims arising from the recall or withdrawal of defective or faulty products. The specialists at Citynet understand the impact that a product recall can have on a business and are well placed to assist you in devising the best program to ensure the most comprehensive cover is in place for your clients.
With Citynet’s assistance, you can be sure that your clients’ products insurance is positioned in such a way that their businesses are well prepared to weather any storm that blows their way.