The largest product recall in Australia was that by Pan Pharmaceuticals in April 2003. The Therapeutic Goods Administration recalled 1600 different products for reasons of safety.
Most commonly, products are recalled because of the failure of a production process.
Then there are extortion attempts such as those resulting in the recall of Panadol and Herron in June 2000 and Masterfoods’ recall of Mars & Snickers bars, in NSW only, in 2005 at a reported cost of $10 million.
The process of recalling product may involve notifying the public, consulting with police if it is malicious, dealing with health authorities if it involves food and/or other government departments for the manufacture of goods that must meet Australian Standards.
Having the resources to cater for the return of product, additional staff to notify wholesalers or retailers, advertising the recall, special hotline phone numbers along with appropriately trained staff is hugely expensive even before considering the actual product cost, cleaning and/or re-manufacture, loss of reputation and profits.
Historically product liability policies do not provide adequate insurance for the events and costs outlined above and certainly do not cover the loss of reputation and market share. In addition, Product Recall insurance may not cover malicious acts. Specialist liability policies are required along with broker and legal advice to ensure the insurance is tailored to the business.
Such specialist insurance policies come under the headings of Product Recall, Product Tampering, Product Integrity and Extortion insurance to name a few.
The Australian Government website provides a Product Recall Guide which identifies how to recall unsafe consumer products and who has to be told. It also provides a list of current products recalled. Refer External Links below.
Author
Published with permission of Claim Solutions Pty Ltd
Insurance Policy
Country: - Australia
Policy Description: - Product Recall, Product Tampering, Product Integrity and Extortion.
Insurer: - Various
External Links
Product Recall In Australia - Australian Government Site
