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Survey Report

Insurance Marketplace Realities 2022 Spring Update – Product recall

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April 7, 2022

The FDA is ramping up its use of technology relative to food safety, since the adaption of the Reportable Food Registry, which allows companies to self-report potential contaminated foods.
Rate predictions: Product recall
Trend Range
Most risks:
Product recall Increase (purple triangle pointing up) Flat to +5%

Key takeaway

The Food and Drug Administration (FDA) is ramping up its use of technology relative to food safety, since the adaption of the Reportable Food Registry, which allows companies to self-report potential contaminated foods. The agency will be better able to track patterns and focus inspections on particular products, pathogens and allergies. As the underlying data becomes more available and accurate, it will likely become a focus of underwriting and influence submissions.

Marketplace changes appear to be favorable to buyers.

  • A new market that began writing January 1, 2022 is looking to grow into the largest insurer in the recall space and has staffed up with recognized talent.
  • Some long-time players have also stacked their bench with new underwriting talent.
  • Underwriters who left one leading carrier have set up a new shop.
  • These moves have increased competition, and we have seen the top end of rate increases drop to 5%. We expect rates will continue to flatten.

COVID has had broad impact on the recall market.

  • The well-documented supply chain issues of the COVID era have wreaked havoc on manufacturers, disrupting plans to manufacture products new and old, and representing a barrier to re-manufacturing a recalled product, which can be a threat to bottom lines. Supply chain breaks have impacted materials ranging from silicon chips to common nylon.
  • Commodity prices have roller-coastered, rendering the claim and resupply process chaotic.
  • Pervasive labor and talent shortages have hit quality control teams, leading to concerns about false and sub-standard inspections.

Brand reputation is a complicated issue in the Internet age.

  • Consumers are getting news from multiple sources, and controlling the narrative is a seemingly impossible task.

Changes in government regulations stand to alter the rules of the game.

  • The SHARE Information Act, if passed, would increase financial penalties against companies for violating safe product laws and for failure to share safety reports.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for losses relating to the Ukraine conflict. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include coverage relating to the Ukraine conflict. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third-party sources we consider reliable; however, we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. -The Ukraine conflict is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

Contacts

Kevin Velan
Director, National Product Recall Team

Shawn McCleary
Associate Director, National Product Recall Team

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