In recent months, several retailers around the country have asked their produce suppliers to have at least $5 million invested in recall insurance in the event that a contamination issue leads to costly disruption at the retail level.
This trend, asking suppliers to financially protect retailers from unanticipated costs caused by issues at the point of origin, has been going on for many years and is especially prevalent in the food safety arena. During this period, Western Growers Insurance Services has explored many insurance options and we have now put together a robust program that anticipates the issues and can help a member financially manage a recall-related event.
The Western Growers Shield® is a product recall insurance program to cover risks associated with food contamination incidents that can be tailored to solve your company’s most immediate needs. This a voluntary coverage program, but one that more and more retailers are requiring, or at least encouraging, suppliers to have.
Our program is designed to help you avoid such an event, build a team to respond to a recall issue, have a clear-cut idea of what to do when an event occurs and lastly, help you recover from a recall, which can be financially devastating.
Recall insurance offered by commercial brokers is typically an off-the-shelf product that does not account for the nuances present in perishable products like fruits, vegetables and nuts. The Western Growers Shield was developed more than a year ago with input from the supplier community and we have been modifying it ever since to meet the needs of our diverse membership. It’s not a one-size-fits-all product. Every supplier’s needs are different based on the products they are trying to insure, their size, their financial condition and their customers.
We offer a basic policy that covers the supplier’s expenses in recalling product and destroying it. We also have more robust policies that extend the coverage to the expenses incurred by a third party, such as the retailer, and can include rehabilitation of your brand. For certain products and companies, it may be enough to have a basic policy so you can comply with the demands of your buyer. For others products that might present a greater risk, a more complete policy could be the answer.
All of our policies recognize the inherent issues in perishable contamination cases. We know that the recall is typically voluntary and often there is no definitive trace back. The Western Growers Shield will pay for covered expenses if the supplier has reason to believe their product could lead to illnesses or death.
WGIS serves as the broker for this product and places the insurance coverage with several different companies depending upon the needs of the policyholder. Our most basic policy starts at $5,000 and the cost escalates depending upon the size of the firm, the commodities covered and total sales.
We are here to help. If you need any assistance with protecting your company from food contamination disasters, feel free to reach me at (949) 885-2351 or JGullickson@wgis.com.