Changes to EU legislation has increased risks for UK companies
Recent changes in EU product recall legislation have created a far riskier environment for UK companies, a leading insurance company has warned.
Ed Mitchell, senior underwriter at XL Insurance, told AIRMIC delegates that food and drink companies now had significantly tighter requirements and obligations to follow. This not only increases their financial exposure but also the risk to their brand and reputation.
“The regulatory requirement for product recall, especially for the food and drink sector, can be a legal minefield. Companies are also increasingly under the spotlight from the media and consumers. The ability to manage a product recall could determine an outcome between commercial success and financial disaster,” Mitchell warned.
He said that exposures are generally split into the financial loss and damage to the reputation.
“When companies decide on the product recall coverage, the quality and depth offered by the crisis management element should not be underestimated. In today’s world companies live or die by their brands and if a recall is handled badly, the reputation can suffer and sales can plummet. It is important that companies think about their crisis management long before disaster strikes. We encourage buyers and brokers to look at their current cover and carefully consider what risks they face,” Mitchell said.