Product Recall

Delta Insurance introduces Product Recall cover targeted at small to medium businesses

Specialist underwriter Delta Insurance is shaking up the industry with the introduction of a unique Product Recall policy targeted at small to medium businesses. While product recalls are more commonly associated with large multinational corporations such as automotive manufacturers, Delta Insurance has recognised that smaller organisations including manufacturers, importers and distributors, wholesalers, growers, and other concerns face similar risks. A product recall is costly, inconvenient and interrupts the flow of business, and for smaller organisations can pose an existential risk to an already little-known or unestablished reputation.

That’s according to Oliver Gilmore, Delta Insurance’s Brisbane-based Casualty Underwriter. “Traditionally, Product Recall insurance has focused on the higher end of the market and has been a costly cover with premiums running into tens of thousands of dollars. We’ve recognised that smaller companies face the same risk on a reduced scale, but with an impact which can be devastating; not many organisations can or want to wear a fifty- or hundred-thousand-dollar loss – and with product recalls, that impact can come out of the blue.”

He points to the recent case of needles being purposely placed strawberries, a recall incident affecting 68 brands after fruit was tampered with in an apparent ‘disgruntled employee’ case. For growers who did nothing wrong, the impact was severe: one grower stopped producing berries that year, costing 100 people their jobs, while others were forced to dispose of entire harvests. One Queensland grower burned half a million plants along with the harvest, as gathering the crop was no longer feasible.

With cover starting from as little as $300 a year, Gilmore says these incidences are precisely the kind of risks Delta Insurance’s Product Recall insurance is designed to respond to. In addition to covering financial losses, Delta makes available remediation services as part of the cover, including crisis consulting, investigation
services, forensic accounting and legal services, and reputation management. “In the event of a recall, our comprehensive coverage addresses costs associated with removing and replacing products, and the expenses necessary for brand protection. The policy protects profits and mitigates third party damages, shielding everyone impacted,” says Gilmore.

Two kinds of Product Recall policies are available, with one targeted at Consumable Products, and the other at Consumer Goods and Component Parts, with cover of up to $5 million is available.

The Consumable Products policy provides cover for issues including supply chain errors, processing or production errors, distribution errors and losses from adulteration or packaging defects. The Consumer Goods and Component Parts policy offers cover for issues including design, supply chain or manufacturing errors,
and losses arising from defects or mis-labelling problems. While the policies are suitable for a wide range of industry segments, they are not appropriate for pet and infant foods, bulk consumer goods such as commodities, flavourings and preservatives, or the tobacco and related industries. Major automotive and aviation manufacturers and the chemicals industry are also excluded.

Gilmore says the product is available now and is being marketed through the Delta Insurance broker network. “While this is a new product category for most of our brokers, the policies are designed to be accessible for the dealer network and their customers. Most risks are assessed via a one-page proposal form requiring fairly
basic information, with larger or more diverse risks going into more detail. We’ll be launching a broker portal next quarter which will make the application process more streamlined for our brokers and customers. We anticipate brisk demand as word gets out as we feel certainly in the SME space this market has not had many
affordable options available.

To hear more about Product Recall contact Oliver Gilmore, Casualty Underwriter, on
oliver@deltainsurance.com.au