Product recall concerns prompt new insurer offering

Product recall concerns prompt new insurer offering | Insurance Business

Product recall concerns prompt new insurer offering
AIG has launched a new web-based service to help companies estimate the cost of recall incidents.

NOVI is a service designed to meet growing concerns over the financial impact and frequency of product recalls for food and beverage businesses in Australia.

“NOVI helps food and beverage manufacturers understand their exposure to a recall event, and make more informed decisions about how to manage their risk,” said Nicky Alexandru, vice president for crisis management, global casualty, AIG.

“While most companies are generally aware of the frequency of product recalls, they are unsure of the potential magnitude of the cost of a recall event.”

NOVI is said to be a first-of-its-kind free and confidential web-based service that can estimate a company’s probable maximum recall loss in the event of an accidental contamination.

The estimation process uses more than 80 data points and a proprietary methodology.

 “There are on average, five product recalls reported every month in the food and beverage industry in Australasia, with two to three incidents occurring in Australia alone,” said Claire Richards, crisis management manager, AIG Australia.

“Maintaining food safety standards and managing recall risk are two pressing issues for Australian companies and, through NOVI, we can now assist companies in quantifying a potential threat to their business so that they can manage their risk more effectively.”

“Expenses from a product contamination recall event can mount quickly. These can include replacement and destruction costs, lost profit from plant shutdowns, government intervention, loss of profits and brand and reputational damage,” said Richards.