• The automotive, food, and pharmaceutical industries have the highest demand for product recall insurance.
• Product recall insurance can cover various types of damages, from the costs of product withdrawal to the reputation damage caused by negative incidents.

Bucharest, July 13, 2023: Leader Team Broker, a key player in the niche insurance market in Romania and Europe, offers manufacturers and traders Product Recall Insurance, a policy that helps mitigate losses caused by product withdrawals from sale, as well as other costs associated with such situations that impact reputation and public image. The policy, created in collaboration with leading insurers in Romania and the Lloyd’s market, covers the damages suffered by manufacturers when their products fail to meet quality standards and need to be withdrawn from the market for various reasons (manufacturing errors, tampering, accidental contamination, or posing health risks to consumers).

The automotive, food, and pharmaceutical industries are the sectors with the highest demand for Product Recall Insurance. However, any company that deals with physical products, regardless of the industry, should consider this type of policy to protect their business, revenue, and reputation.

“Product Recall Insurance is essentially addressed to all companies that produce and sell products, whether we’re talking about the food industry, furniture manufacturing, clothing industry, IT industry, or the automotive industry. The coverage provided by this policy can vary based on the specific needs and risks of an industry or a company and can include a wide range of costs generated by the product’s withdrawal from the market. Therefore, it is important to carefully review the specific clauses and conditions of the Product Recall Insurance policy, as coverage and limitations can vary depending on the insurance provider and the policy itself. Consulting with an insurance specialist is recommended to understand in detail what damages are covered and to ensure adequate coverage based on the specific needs and risks of the company. At Leader Team Broker, we provide our clients with the best specialists who offer targeted consultation tailored to each client’s needs,” said Alexandra Elena Durbacă, CEO of Leader Team Broker.

Withdrawing a product from the market occurs when the manufacturer discovers that the product does not meet the required quality standards, has defects, or poses risks to consumers, or when it has already caused harm to consumers and authorities demand its removal from sale. In either situation, a product recall results in significant financial losses for the manufacturer, starting from the manufacturing costs, damage to reputation, and potential material damages awarded by courts as a result of legal proceedings.
Product Recall Insurance supports manufacturers facing such situations and represents a specialized form of insurance that provides financial coverage when a company is required to recall a product from the market.

“Product recall insurance has become a necessity in our modern times when product withdrawals from the market are increasingly common, and manufacturers experience losses of even hundreds of millions of euros or dollars. Whether we’re talking about contamination with various bacteria in the food industry, brake system failures or airbag defects in the automotive industry, or manufacturing errors in phone batteries causing explosions – to name just a few of the most well-known examples in recent years – product recalls happen almost daily worldwide in all industries. At the same time, manufacturing companies face a blow to their reputation and encounter criticism and lawsuits from consumers, especially if the respective products endangered their lives.

Often, a product recall can lead to the bankruptcy of the manufacturer. Therefore, product recall insurance represents an essential tool for companies that produce and sell various products, offering valuable protection against all risks associated with product recalls. Leader Team Broker understands the need for such insurance in the market and addresses the needs of our partners by providing this essential form of support in protecting their business and managing the costs generated by a potential product recall,” said Răzvan Rusu, founder of Leader Team Broker.

Product Recall Insurance can be implemented in a variety of industries as a protective measure used by companies to cover the costs associated with recalling a product from the market for safety or compliance reasons. For example, in the food industry, food and beverage producers can request product recall insurance due to the risks associated with contamination, incorrect labeling, or any other issue that may affect consumer safety. In the electronics industry, companies manufacturing mobile phones, computers, televisions, appliances, or medical devices can also request product recall insurance as defects or technical problems can have serious consequences for users. The pharmaceutical and toy industries are also sectors that frequently face product recalls, making such insurance more than necessary in these situations.

Although not mandatory, there are industries – such as the automotive industry – where component suppliers are required by manufacturers to provide product recall insurance. Vehicle and auto parts manufacturers typically insure against recalls, especially when there are safety issues such as defects in certain components or fire risks.
Product Recall Insurance can cover various types of damages depending on the specific policy clauses. Generally, the policy covers the costs of product withdrawal, such as transportation costs, temporary storage, product destruction or reconditioning, communication and public relations costs, image and reputation damages, direct financial losses (affected revenue or profits due to product recalls), as well as legal assistance costs, including consultancy and defense in litigation or regulatory matters.

Globally, the most costly product recalls that caused billions of dollars in damages to manufacturers have occurred in the automotive industry (vehicles with manufacturing defects that endangered passenger safety), the food industry (products contaminated with E. coli, Salmonella, or Listeria), and the pharmaceutical industry (medications not compliant with regulations).

About Leader Team Insurance Broker:
Leader Team Broker is an insurance brokerage company with a European presence and over 17 years of experience in risk management and insurance. The company is recognized as one of the most innovative players in insurance brokerage, offering unique liability, health, cyber security, IT industry, maritime industry, aviation, energy, marketing, and HR products.
In 2021 and 2022, Leader Team Broker was awarded the “Insurance Broker of the Year” in the UK at the Corporate LiveWire Awards for the creativity and innovation of its insurance products designed for emerging industries that address new business challenges. The jury appreciated Leader Team Broker’s ability to break norms and provide creative products for rapidly expanding industries and diverse risks.

In 2020, the company’s achievements were recognized by Piața Financiară publication with the title of “Insurance Broker of the Year” and by Financial Intelligence with the distinction of “Cyber Security Insurance of the Year 2020.”

The London-based cybersecurity news publication “Treat Technologies” included Leader Team Broker in the top 20 global companies offering the best insurance solutions and products in cyber insurance. In 2017, the company received the “Most Creative Insurance Broker in Romania” award from Media XPrimm, and in 2019, it received the award for “Innovation and Digitalization,” being the only brokerage company to use Robotic Process Automation (RPA) technology for repetitive financial operations. In 2020, Piața Financiară recognized the company at the e-Finance Gala with the “e-Risk” award for the best product aimed at preventing and covering cyber-attack risks.