AIG Contaminated Product Insurance
Could your client’s business withstand the effects of product contamination or tamper, leading to a product recall? AIG has developed an insurance solution that protects businesses from the potential devastating effects of such incidents.
Companies operating in the food and beverage industry are vulnerable to product contamination, tamper or extortion. Regardless of how sophisticated the food safety programme and quality management plans are, or how many precautions are taken, both accidental contaminations and product tampering can and do occur.
In some cases, the problem may have a devastating effect on the company’s reputation and financial viability, especially when the contamination has the potential to cause bodily injury or affects a large volume of stock. A single incident and any subsequent media coverage can pose a significant threat to consumer confidence, hard-won retail space, important contracts, market share, brand credibility, reputation and profit.
AIG’s Solution
AIG has developed an insurance solution that protects businesses from the potential devastating effects of such incidents. Our comprehensive Contaminated Products Insurance (“CPI”) cover provides the financial compensation and vital financial support for getting your client’s business back on track.
Cash Flow
The substantial costs of conducting a recall usually begin accruing just as cash flow suffers from the suspension of sales. Our comprehensive cover is designed to meet the direct costs of a recall. This may include:
- Initial product testing
- Retrieval and reverse distribution of suspect stock
- Destruction and disposal of faulty products
- Additional human resources or storage space
- Replacement or reworking of faulty products
- Redistribution of new products
Preparation
Our clients have access to funded consultancy services (up to a pre-agreed limit) to help with loss prevention. This may include crisis planning or product recall stimulation training, which can be conducted as part of a risk management programme to test the company’s recall procedures.
Communication
Our CPI policy includes PR crisis consultancy services following an incident. This might be tactical communication advice, or hands-on drafting of a press release and other communications. This may include communication with regulators, media, staff, suppliers, customers or investors.
Ability to act quickly
Our expert recall, food safety, security and PR consultants respond within hours to provide advice and assistance. All consultants are accessible by a single call to our 24/7 crisis response hotline.
Brand Rebuilding
Following a recall, businesses need to turn to the expense of rehabilitation – and regaining precious market share. These costs could include maintaining staff salaries or perhaps overhauling the production environment to eliminate the source of the offending contamination.
Our comprehensive Contaminated Products Insurance (“CPI”) cover provides the financial compensation and vital financial support for getting your client’s business back on track.
Policy Coverage
Our CPI policy covers your client for the following possible events:
Accidental Contamination
Accidental or unintentional contamination, impairment or mislabelling of the insured product which occurs during production, packaging or distribution, that would result in property damage or bodily injury.
Malicious Product Tampering
An actual, alleged or threatened malicious and wrongful alteration or contamination of the insured product to render it unfit or dangerous for use (or to create such impression to the public).
Reported Contamination
False reporting of an alleged, but not actual, accidental contamination in the media or a government publication where the insured product is specifically named
Intentionally Impaired Ingredients
Contamination or impairment of the insured product which occurs as a result of an ingredient supplied to your client by a third party, provided that such contamination was intention and wrongful (but not malicious).
Government Recall
An accidental contamination of the insured product that causes it to be injurious to health or unfit for human consumption, resulting in an official recall order by authorities.
Product Extortion
Malicious product tampering involving a demand for monies.
To meet rising demands businesses, rely on mass production, diverse vendors and suppliers, as well as complex manufacturing processes. Product contamination and/or a defect can occur anywhere on the supply chain and is a prevalent risk for many organisations. Malicious product tamper and product extortion can have significant consequences for a business. Disgruntled employees, political and social activism, sabotage and terrorism can all potentially result in intentional contamination of products. Having a robust plan in place is critical.
Claims Scenarios
Accidental Contamination – Contaminant: Allergen
As a result of a severe allergic reaction from a consumer, a manufacturer of canned sauces was notified that dairy products may be present in their sauce product. An internal investigation revealed that an ingredient supplier has reformulated their seasoning blend but did not include dairy on the ingredient list. The sauce manufacturer had to recall thousands of cases of product that contained the undeclared dairy allergen.
Malicious Tampering, Product Extortion – Contaminant: Poison
A soft drink company was threatened with product poisoning unless a multi million-dollar ransom was paid. Poisoned product samples were found and at least one person became seriously ill after consuming a tainted product. The tampering occurred while the product was in retail stores. The company initiated a major emergency recall of the targeted product. The company suffered significant losses due to recall costs, condemned product and reduction in sales. The extortionist was later arrested.
For More Information
For more information, please feel free to contact us directly;
Leah Moran Des O’Reilly
Casualty Underwriter Head of Casualty
T +353 (1) 859 9714 T +353 (1) 208 1455
leah.moran@aig.com des.oreilly@aig.com