Insurance Marketplace Realities 2022 Spring Update – Product recall

Rate predictions: Product recall

	Trend	Range
Most risks:
Product recall		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.

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Contacts

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Kevin Velan

Director, National Product Recall Team

email Email phone +1 312 288 7140

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Shawn McCleary

Associate Director, National Product Recall Team

email Email phone + 1 312 288 7351

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