The increasing necessity for product recall insurance
Blue Bell Creameries of Brenham, Texas made the decision to voluntarily recall all of its products on after two chocolate chip cookie dough ice cream samples tested positive for Listeria, a potentially fatal bacteria. The extensive recall includes ice cream, sherbet, frozen yogurt, and other frozen snacks distributed in 23 states and internationally. This development comes after Blue Bell issued a more limited recall in March after the Centers for Disease Control and Prevention (CDC) connected ice cream contaminated with Listeria to three deaths in Kansas. The Center for Disease Control and Prevention confirmed that 10 people in total from four states have contracted Listeria as a result of this outbreak.
Hundreds of products are recalled in the United States every year, including a few major recalls including well-known brands such as Tylenol and Firestone Tires. Recalls can be disastrous financially, and even have the capability to put a company out of business. Some companies remain ignorant of the fact that nobody is impervious to the risk of product recalls despite immaculate safety records, manufacturing oversight, and operational controls.
Product recall insurance covers various costs including but not limited to advertising and promotional expenses to launch a recall, business interruption, and costs related to product destruction and disposal. This latest recall at Blue Bell comes as another reminder of the necessity for product recall insurance, and how valuable it can be when mitigating the financial hit a company takes as a result.
About the Author
Amy Sinclair is an Executive Vice President and co-leader of the Life Sciences Practice in WGA’s Property and Casualty Group. She negotiates, implements and manages comprehensive insurance programs for a variety of clients, ranging from venture-backed start-up organizations up to publicly traded companies.