PREPARING FOR THE UNEXPECTED IN
NEW ZEALAND’S FOOD BUSINESSES
Every year in New Zealand, businesses produce, package and export food and
beverage products worth $29 billion. Whether it’s cheese to China or pinot to
Poland, New Zealand-made food and beverage products are recognised the
world over for their quality and safety.
One of these could cost millions
A single contaminated ingredient could cost you millions of
dollars in product withdrawal and replacement, business
interruption, loss of reputation, and loss of earnings.
Talk to your insurance broker today about AIG’s Contaminated
Products and Product Recall Insurance Solutions.
www.aig.co.nz/cpi-recall
FT614
But in the rush to maintain supply and
satisfying growing demand, it is crucial
not to overlook the importance of food
safety and managing the risks of a
product recall to protect business continuity.
“One of the key things that stands out in many
of our customer conversations is that a lot of
businesses assume that the ‘worst case’ scenario
won’t happen to them,” AIG New Zealand senior
casualty claims examiner Sophie Hart says. “Or they
are prepared for risks within their control but not
those that can happen through no fault of their own.
“The recent issue with needles being found in
strawberries in Australia and New Zealand is a great
example of that. The Australian strawberry industry
virtually came to a standstill because of this issue
but it’s not something growers would necessarily
anticipate. We want to raise more awareness of the
risks in New Zealand and help our food producers
manage them better.”
Hart says machinery breakdowns are a common
cause of food recall and contamination issues,
particularly in cases where contract manufacturing
is in place.
“It’s one of those areas where our customers
sometimes say, ‘we would get the other party to pay
for that’, but often that’s not an option,” she says.
“In small businesses with tight margins, the loss
of a product batch through a machine breakdown
can be 'make or break'. Part of what we do is help
clients to understand where liability lies in these
situations and ensure they have cover that can help
them replace or pay for lost product.”
Hart’s team has deep experience in how product
recalls work differently around the world, and
through the AIG network has been able to support
clients with challenging and complex offshore
recalls.
“In the US, recall procedures are very strict,” Hart
says. “In one case we helped a customer pay for
setting up and running a call centre in the US for
four weeks to ensure they could not only handle
the recall but also rebuild their sales pipeline for the
future.”
Hart also helps businesses protect themselves in
cases of accidental contamination or malicious
threats to contaminate products.
“We have seen a lot of different food contamination
cases. Our approach is customer-centric and we
always look for ways we can help customers cover
the costs associated with these issues,” she says.
“Sometimes, it may be that the best support is to
help pay for the right advisors and support systems
to minimise the spread and impact of issues.”
Over the years, AIG has assessed hundreds of
food contamination and recall issues for its New
Zealand clients. “Even in businesses with the very
best systems and processes in place, recalls and
contamination issues are a reality in food and
beverage manufacturing,” Hart says. “Our message
to these businesses in New Zealand is to think of it
like car insurance – you wouldn’t think twice about
insuring your car, given the high level of possibility
that something could go wrong. It’s the same in a
food business where the risks are well known. You
can protect yourself from many of the likely issues.”
And the strangest case that Hart has ever seen? “A
turkey drowned in a vat of wine,” she says. “We’re
still not sure exactly how it managed to get in there
but at least we were able to help our customer
replace the wine!”
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