Maggi row: Product
Recall Insurance
After
Maggi noodles controversy, insurance companies are getting higher number of
inquiries for product call insurance. Product recall insurance comes with as an
add on feature with product liability cover. Insurance companies recommend this
cover to manufacturers because, besides covering the cost of recall, it is seen
as feature that limits product liability.
In
India, the most significant instance of product liability in the food industry
happened in 2003 when chocolate maker Cadbury faced charges of infestation.
This incident caused huge losses to Cadbury and compelled the company to
redesign its packaging.
However,
even after that incident, demand of product liability cover did not pick up
significantly. It would be good if company have product recall insurance as
presence of toxic substances is not the only reason for product recall.
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Warm regards,
Arvind Trivedi
Certified Financial Planner
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