PRODUCT RECALL INSURANCE YOUR BUSINESS’S INVALUABLE LIFELINE
Product recall costs and reputational damage can spiral out of control and drain the pockets of a business if not managed properly, advises VERNON SUBBAN
2
021 has been a year when South African consumers were exposed to one of the largest product recalls in the food industry. When a product’s safety is in question, timing is everything, decisions need to be made. There is no room for ill-judged ones. Product recall costs can spiral out of control and drain the pockets of a business if not managed properly and reputational damage hits a business the hardest when social media
goes viral. Product recall insurance will be any business’s “handmaiden of commerce” to cover the costs incurred to recall that defective or unsafe product from the market.
PRODUCT RECALL INSURANCE EXPLAINED When a product poses a hazard to consumers, there are two parties that can initiate a product recall. The first being the product manufacturer, making the recall
a voluntary one. The second being the National Consumer Commission (NCC) under the auspices of the Consumer Protection Act 68 of 2008 (CPA), initiating a recall that is involuntary or compulsory. However, in both instances the affected business has to cover the huge costs. The product manufacturer may be ultimately accountable for initiating a voluntary product recall, however other role players in the supply chain would be opportunistic to think they would be
30
VernonSubban.indd 30
12/13/21 3:47 PM
