VIEW: On the rise of the multiple recall event

While the recent news of even further recalls at Whirlpool has hit the headlines, it’s just one example of an increase in the severity of recall events that we’re seeing both in the consumer and automotive sectors. And what I mean by that is that rather than just being one recall affecting one particular product line, it becomes an ongoing event resulting in multiple recalls.

We’ve seen inter-related recall events for consumer goods such as washing machines, tumble dryers, coffee makers and also in the automotive sector for things like seat belts so it’s fair to say that insurers are viewing these risks in a less than positive light as a result. While it’s too early to say how much of an impact this is having on pricing, I would say that it is impacting appetite amongst insurers when it comes to certain elements of cover. For example, brokers are requesting longer indemnity periods on a range of consumer and automotive risks – wanting to push them out as far as three years. It's likely insurers will be more cautious around extending this and incurring extended business interruption claims.

However, events of this magnitude have served to raise awareness amongst manufacturers that the true cost of such an event goes much further than simply getting a product off the shelves and fixed. I think they’re much more aware now of the additional challenges of falling sales and brand reputation and that perhaps the most expensive part of a recall is keeping the business operational while facing intense public scrutiny.

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