The implication of policyholders in withdrawal/recall campaigns

From everyday consumer goods to food products, vehicles and construction materials, we are regularly alerted to the existence of risks associated with the use or consumption of products that could jeopardise our health and safety.

These risks are the direct result of the development of and increase in products available to consumers. However, we should consider the implications for manufacturers and distributors when a product defect or non-compliance is found.

From the moment a product defect is brought to the attention of the various stakeholders involved in its sale, a withdrawal phase is generally launched and a recall campaign may be implemented.

It is essential that the various stakeholders in the supply chain are informed and take action as quickly as possible so that the products are immediately removed from sale.

At the same time, we must inform consumers so that we can recall any goods already sold.

As such, the media plays a vital role in communicating this information. However, in most cases, alerts broadcast by TV news programmes only occur within the context of commercial or health scandals.

For example, a popular consumer protection site has documented hundreds of products that have been recalled in the last two years, including more than twenty since the beginning of 2018. However, few of these cases have been mentioned in the press.

The effectiveness of a withdrawal/recall campaign is determined by the companies’ ability to establish the traceability of their products.

Whilst the automotive sector appears to be relatively well organised through its dealer networks, particularly thanks to the existence of customer files which make contacting buyers a quick and easy process, the majority of other goods, which are generally bought on a self-service basis, do not benefit from such traceability.

The measures taken by all stakeholders in the supply chain are therefore essential: alerts launched by the media, notices for the attention of customers affixed to shelves and tills in shops, alert messages on e-commerce sites, etc.

The various stakeholders must be fully mobilised, as in the event of a claim the insurer may have to reflect upon the application of its policy.

In effect, to what extent can we argue that there is a risk if the policyholder has not taken all of the necessary measures to limit the occurrence of a risk?

In other words, and subject to verification by the insurers and their loss adjusters, the riskthe keystone of the insurance policy – could be called into question if it appears that the policyholder failed to react in a timely manner and did not make every effort to withdraw and recall the litigious products.

Although it appears unrealistic to expect the policyholder to guarantee zero risk within the context of a withdrawal/recall campaign, the anticipation and rigorous follow-up of the procedures followed by every link in the supply chain remain essential to limit the risks and the occurrence of claims.


Stephanie DUMOULIN, Industries & Service Loss Adjuster