The Maggi Noodles Controversy has created an anxiety in the food industry, Insurance companies are getting higher number of inquiries for product recall insurance. Product Recall insurance covers the business costs related to recalling a product from the market as a result of certain defined triggers.
Large companies and MNCs have been buying product recall insurance for several decades now. However, the recent controversy surrounding Maggi has jolted big and medium companies to look at product recall insurance seriously. Product recall insurance can be vital cover for manufacturers, importers, distributors and retailers, it covers products as diverse as food and drink, cosmetics, pharmaceuticals, tobacco, toys, electrical equipment and even packaging and tools.
In India, the most significant instance of product liability in the food industry took place in 2003 when chocolate-maker Cadbury faced charges that it was distributing chocolates with infestation. The FDA had ordered seizure of all Cadbury’s Dairy Milk chocolates. The incident caused huge losses to Cadbury and compelled the company to redesign its packaging. However, even after the incident, sales of product liability cover did not pick up significantly.
But this time round, the Maggi controversy has compelled the food industry to have product recall insurance. Mr. Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance, said that “Product recall insurance was initially popular among the automobile industry. Then there was demand from the pharmaceutical industry. We are now seeing interest from the food industry. Indian companies are now being conscious about product liability”.
