recall insurance Archives - California Agriculture News Today

Social Media Can Hurt a Company

By Jessica Theisman, Associate Editor

Product recall coverage has a publicity element. California Ag Today recently spoke with Caitlin McGrath, national product recall and contamination risk consultant with Lockton Insurance Brokers, about the importance of the topic.

Caitlin McGrath, with Lockton Insurance Brokers.

Product recall coverage’s publicity element can be adverse, with the accusation of contamination coming into play.

“The example I always use is a mom who puts online a food item that made her kid sick, and this gets shared 100,000 times. You get calls from your customers, supermarkets, and drug stores asking you to stop sending your product,” McGrath said.

If products are not selling, that can be a very significant loss.

“Most recalls are voluntary. They have to be reported to the FDA if they are going to cause bodily injury or property damage,” McGrath said.

She suggests having an internal communication and external communication setup. Be aware of what testing labs you are going to use, what PR companies you are going to use.

Many times, companies try to execute their recall and are not ready for the customer demands.

“Sometimes customers are coming to them and saying, ‘you owe us all this money,’ ” McGrath said. “It is important to have the plans for the whole logistics of the recall.”

Importance of Recall Insurance

Brokers Can help Growers Minimize Losses

By Jessica Theisman, Associate Editor

California Ag Today recently met with Caitlin McGrath, the national product recall and contamination risk consultant with Lockton Insurance Brokers. Insurance is needed for California growers in case of recalls and contaminations. Lockton feels the most important part of finding the right recall insurance is the consulting element.

Caitlin McGrath, Lockton Insurance Brokers

“Now, what I think is the most important part of insurance coverage is the consulting element,” McGrath said.

These are consulting services that are available if you are a recall or contamination insurance purchaser that allows you access to specialists during and before incidents. One of the struggles that McGrath is noticing is that the quality assurance folks she speaks to are not insurance buyers.

“They are the ones finding out the information about all these services that are available, and it’s not always getting down into the field,” she said.

Preparation in the case of recalls or contamination is important.

“Fan Favorite, as I call them, do a lot of really great work on behalf of a lot of our clients,” McGrath said.

Some of that work can be Hazard Analysis Critical Control Point (HACCP) training and mock recalls. Financial costs are rising due to the increasing number of recalls.

“We believe that that’s the effect of [the Federal Information Security Management Act or] FISMA. They are getting larger in financial cost, and that has to do with the amount that is being recalled and the implications in terms of publicity,” McGrath said.

Recall plans need to cover all of the elements, not just mock recalls.

“The internal message is just as important and knowing who is going to handle what within an organization. Planning and practicing that is really critical to help mitigate if there is a problem,” McGrath explained.

“Having directives around the use of social media as an employee of an organization is very important, but just one department not talking to another is going to have a huge part in this,” she said.

Buying product contamination insurance is expensive, but necessary. Since McGrath started, the number of brokers has nearly tripled.

“I think that not having insurance is now the outlier, so I think the majority of folks are still buying,” she said.