Thursday, September 24, 2015 Des Moines, IA. 9:30 10:30 a.m. FOOD RECALL PANEL DISCUSSION

Transcription

1 Thursday, September 24, 2015 Des Moines, IA 9:30 10:30 a.m. FOOD RECALL PANEL DISCUSSION Presented by Casey Roberts, CIC, AFIS, ACSR Laurus Insurance Consulting In the past few years, food recalls seem to have become frequent and are often breaking news items. Even organizations with the best safety records and controls can sometimes find themselves dealing with a product recall situation. Agribusinesses can be particularly vulnerable. Managing a product recall is time consuming, costly, and potentially damaging to the business and brand. This session will discuss the limitations on coverage within standard insurance policies and the extent to which product recall insurance provides the insured indemnification for its financial losses resulting from the recall of a product. Copyright 2015 International Risk Management Institute, Inc. 1

2 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 2

3 Casey Roberts, CIC, AFIS, ACSR Laurus Insurance Consulting A veteran of 35-plus years working on the agency side of the business, Casey Roberts brings a great wealth of technical knowledge and industry smarts to wherever his travels take him. Most recently, he founded Laurus Insurance Consulting. The focus of this venture is working with individual agents and agencies to improve their sales processes and environments. Prior to this, he spent 10 years as a sales and marketing manager for a large independent agency in northern California. First established with a direct writing carrier in 1976, Mr. Roberts moved into management with that same company and then shifted to the independent agency marketplace in It was also in the late 1980s that he began his career as a noted insurance industry speaker and educator. He now instructs as part of a nationwide effort to educate those in the insurance industry on the various topics that apply to agribusiness insurance and exposures. As part of this effort, he supports those in pursuit of the Agribusiness and Farm Insurance Specialist (AFIS) certification. For agribusiness, he lectures on topics as diverse as farm property and liability, excess and umbrella liability, risk management, workers compensation, the Migrant Workers Act, and more. When not working in that specialized field, Mr. Roberts s diverse efforts and interests also allow him to speak/instruct on topics related to personal lines, agency management, agency operations, and multiple commercial lines topics. Past and present professional associations and affiliations include director of the AFIS designation, director of Independent Insurance Agents and Brokers of California (IIABCal) West Agribusiness Committee, member of the Society of Certified Insurance Counselors, member of IIABCal, and member of the Santa Rosa Sunrise Rotary Club. 3

4 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 4

5 Food/Product Recall Panel Discussion on Serving an Underserved Market Food Safety Modernization Act (FSMA) Passed by Congress in December 2010: largest expansion of food safety in United States since 1930s Enforced by the Food and Drug Administration (FDA) Multiple delays to FSMA because of court challenges Now we have a new timeline for enforcement regulations with implementation expected for late 2015 to mid

6 FSMA: FDA Authority Includes Mandatory recall of contaminated food products Preventive controls and food safety plans at some processing plants Enhanced surveillance to investigate foodborne illness outbreaks Enhanced traceability within food distribution channels Increased inspections of high-risk food facilities Expanded authority over foreign food imports 3 FDA: Five Key Elements of FSMA 1. Preventive Controls 2. Inspection and Compliance 3. Response 4. Imported Food Safety 5. Enhanced Partnerships 4 6

7 Preventive Controls FSMA provides the FDA with legislative mandate to REQUIRE comprehensive, prevention-based controls on the food supply. Mandatory preventive controls for food facilities Mandatory produce safety standards Authority to FDA to prevent intentional contamination 5 Inspection and Compliance Oversight to ensure compliance with regulations Ability to respond when new problems emerge For example, establishing a mandated inspection frequency (based on risk), FDA access to industry records and food safety plans, and requiring testing to be done by accredited laboratories. 6 7

8 Response Respond when NEW problems emerge: Mandatory recall authority for ALL food products Expanded authority to administratively detain certain products that are in violation of the law Authority to suspend a facility s registration Prohibiting a company from selling in the United States Establishing pilot projects to enhance product tracing Requiring additional record keeping by those facilities that manufacture, process, pack, or hold foods designated as high risk 7 Imported Food Safety Do food imports meet US food safety standards? Require importers to verify that suppliers have adequate controls in place Establish a third-party verification process Certification by credible third party for high-risk food entry into United States Establish a voluntary qualified importer program Right to refuse entry into United States of foods from a foreign supplier where the FDA has been denied access to its facilities or country 8 8

9 Enhanced Partnerships Authority to improve training of state, local, territorial, and tribal food safety officials Multiyear grants to state/local agencies to develop and implement strategies to enhance their food safety Similar strategies to enhance foreign governments and industries Authorizes FDA to rely on inspections by other federal, state, and local agencies in order to meet its increased inspection mandate for domestic facilities 9 Court-Ordered Timelines 8/30/15: preventive controls for both human and animal food 10/31/15: imported food and foreign suppliers, including foreign supplier verification program and accreditation of third-party auditors 10/31/15: produce safety 3/31/16: sanitary transportation practices for food and feed 5/31/16: intentional adulteration of food 10 9

10 Key Questions 1. What are the requirements one normally expects from underwriters when it comes to complete submissions? 2. What can agents/brokers do to better market this coverage to their prospects and insureds? 11 Key Questions 3. What triggers for coverage would you consider to be industry standards? 4. Describe the types of claims services you would expect to be the minimal standard for any insured to receive? Best Practices to receive? 12 10

11 We Should Know Hazard Analysis & Critical Control Point Plan refers to a systematic approach to food safety with an emphasis on hazards and critical control points. This would include a complete food safety management system standard. This is the industry expected NORM 13 Key Questions 5. What are the prospects for an extension of coverage under a GL form (as an example) to provide a specific sub-limit of recall coverage? 6. What resources can you offer to help our prospects develop a Hazard Analysis and Critical Control Point Plan? 14 11

12 FSMA Affect How has the Food Safety Modernization Act impacted (or has it): 1) Coverage Availability 2) Pricing 3) Available Services to our Clients 4) Short Term considerations/concerns 5) Long term considerations/concerns 6) Other areas of consideration 15 Resources Implementation of the FDA Food Safety Modernization Act (FSMA, P.L ) Congressional Research Service R43724 Renee Johnson, Specialist in Agricultural Policy