Let’s face it: Virtually all food manufacturers will have a recall. Over the course of the last decade, a handful of food companies have experienced many recalls, and some of the largest food product manufacturers in the world have experienced dozens.
In many of these recalls, the companies involved had the foresight to purchase recall insurance. And, after most of those recalls were complete, the insurance companies stepped up to the plate and paid the insurance claims.
At some point, however, the insurance companies stopped making money. In fact, there were far more claims being made than the premiums being collected to pay for them. As a result, the insurance companies selling recall insurance began looking for ways to deny legitimate claims. Excuses ranged from allegations the companies involved failed to do enough to control for pathogens in the environment to they failed to provide notice within the required 30 days. In some cases, the reasons for denial had at least some merit, but in most cases the reasons were silly.
Once the insurance companies began taking a hardline approach on recall claims, some food companies began to roll over, accepting the denial of coverage determinations. This emboldened the insurance companies and the days of recall claims being processed expeditiously and fairly were over. Now, getting an insurance company to accept responsibility and pay on a legitimate claim is like pulling teeth.
With the last few months, I have dealt with almost a dozen cases in which insurance companies are balking at paying the claims. In each of these cases, we carefully and methodically create an evidentiary record explaining to the insurance companies why their decisions lacked merit and how they were exposing themselves to liability for improperly denying claims. In each of those cases, the insurance companies finally saw the light and paid the claims.
Moving forward, be aware and be warned. If you carry recall insurance and you are forced to announce a recall, be ready for the insurance company to unfairly process and deny your claims. Do not let your insurance company push you around. Push back and push hard. Let them know, as soon as you can, that your recall insurance claim will not be the next one to be denied. NP