Protecting your clients in a food fight

How do you protect a client that is unknowingly serving its diners pig rectum instead of calamari?

 

Incidents of ‘food fraud’ – the misidentification or mislabelling of a food product, for example – is a growing concern in the United States. The phenomenon is generating a great deal of interest in product recall insurance coverage. 

 

“Over the past several years, there has been a noticeable uptick in the sale of recall policies, as manufacturers, distributors and retailers attempt to protect themselves against supply chain risk,” Lynda Bennett, partner and chair of Lowenstein Sandler’s insurance practice in the United States, told blogger Emily Holbrook of Risk Management.

 

A number of high-profile cases have been widely reported, and many of them involve the exchange of horse meat for some other kind of meat product featured on the menu.

 

For example, Swedish furniture manufacturer IKEA may have regretted moving into the food services in March 2013, when traces of horse meat were found in meatballs that it was serving to patrons in the stores’ cafeterias. The company filed a police report against its Swedish supplier, Familjen Dafgard, which in turn pointed fingers at a Polish slaughterhouse.

 

False fish labels are also coming under scrutiny, particularly in the United States. (continued.)

A two-year study by a marine conservation organization called Oceana collected more than 1,200 seafood samples from 674 retail outlets in 21 states. It found that  nearly nine in 10 samples sold as snapper were mislabeled, as were 59% of samples sold as tuna. 

 

Nearly half of all food purveyors in the survey sold mislabeled fish, with sushi restaurants identified as a particular area of concern. Seventy-four per cent of seafood sold in sushi restaurants was mislabelled. In contrast, 38% of seafood sold in traditional restaurants was mislabelled and 18% of seafood in grocery was suspect.

 

And yes, pig rectum can be used as imitation calamari, although it is unknown where that may have entered the human food chain.

 

So far, incidents in Canada appear to be few and far between. 

 

“To our knowledge it isn’t [happening in Canada],” said Bill McCarthy of Jardine Lloyd Thomspon Canada. “It’s been causing a great deal of difficulty in the United Kingdom or France, where it all started, and it has spilled over into the United States, but we have no indication of it being in Canada at all.”

 

But if future discoveries are made, and product liability lawyers start to knock on your clients’ doors, what kind of insurance can protect your client?

 

Product recall insurance does can cover food fraud, provided there is something wrong with the food. 

 

“There has to be something wrong with it,” said McCarthy. “It has to have gone bad, cause illness, or not look the way it should. It has to have presumably caused bodily injury or illness.” 

 

Processors of food, not restaurants, will more typically buy recall insurance.  An insurance product exists that will protect the reputation of a restaurant exposed to liability because of misidentified food product, said McCarthy, but “it’s not a big seller.”

 

“The larger restaurant chains would have something like that in place,” he said.