As an emerging specialist providing brokers with solutions for the Product Recall space, Falvey Insurance Group Wholesale is sharing insight into the current state of the market.
With continued softness pricewise in the middle market (companies with revenues between $100 million to $1 billion), there are terrific opportunities for businesses to obtain comprehensive coverage at a reasonable cost.
Although pricing has remained fairly flat, it is important to understand that in the last year the number of product recalls reached a 20-year high, at over 1.2 billion product units. Multiple factors can be associated with the uptick, including increased oversight by regulatory agencies and their leverage of technology to pinpoint potential issues earlier in the production cycle. The main verticals we've seen drive these figures is the pharmaceutical and medical device industries, both of which are heavily scrutinized. Although never a certainty, there is a clear possibility that the industry will move into a hard market if the current claim volume holds steady.
Falvey understands the diversity of risks that cross a broker’s desk, so we continue to think about the safeguards this coverage can afford. A few items to consider about Product Recall Coverage:
1) Should it even be called "Product Recall?"
- While it is true that this line of business does cover the recall of products from your customers, they don't need to be in their possession to trigger coverage. Stock recovery in the case of a manufacturing/processing issue found while in your insured's possession are often claim worthy and factor into the increase in claims we've seen.
2) There's Value and Affordability for Clients of All Sizes
- Midsized companies, particularly those doing business with larger companies, can get pulled into claims. Food preparation, auto components, and consumer goods have increased their standards due to regulatory scrutiny. Their parts don't operate in a vacuum. With premiums as low as a few thousand dollars for exceptional coverage, the coverage is a tremendous safeguard.
3) Recalls Aren't Limited to Product Defects:
- A variety of things can happen to product throughout the course of design, manufacturing, and delivery. Undeclared allergens, toxins, and environmental contamination can all cause recalls. And with an increasingly litigious and suspicious society, all will be noticed.
At Falvey Insurance Group Wholesale, we are committed to staying ahead of these trends and providing our clients with the best possible coverage and support. With the markets and limits available for companies of all shapes and sizes, contact us to discuss your next opportunity.
