Commercial Casualty: For reference to this section, see Glossary.
(Y)es or (N)o
1. I operate a commercial aircraft. Aircraft
2. I operate an amusement ride. Amusement Devices
3. I own a bowling center or roller rink. Bowling or Roller Rinks
4. I install burglar or fire alarm systems. Burglar and Fire Alarm Contractors
5. I own a children?s camp or day care center. Children?s Camp Liability
6. I operate an auto or truck for commercial business. Commercial Auto
7. I own a business that could cause bodily injury or property damage to the public. Commercial General Liability
8. My company could be held liable for Human Resource practices. Employee Practices Liability
9. I own an auto garage and am responsible for customer?s vehicles. Garage keepers
10. I operate a health care facility or service. Health Care Services
11. I serve liquor as part of my business. Liquor Law Liability
12. I operate a private membership club. Membership Clubs Liability
13. We operate a municipality or county. Municipalities
14. I operate a medical products company that makes or sells pharmaceuticals. Pharmaceuticals and Medical Products
15. My manufactured products could be subject to a product recall. Product Recall
16. I operate a social services organization that serves the public. Social Services
17. I occasionally have a special event that I wish to insure separately. Special Events
18. I operate a trucking, bus, charter or school transit, or public auto service. Trucking...for hire
19. I am required to provide Workers Compensation as I have employees in my business. Workers Compensation
provide physical damage and legal liability coverage for individuals or corporations that own small aircraft.
covers bodily injury and property damage due to the operation of amusement rides and equipment.
Bowling Centers and Roller Skating Rinks
covers primary and excess property and casualty coverage for these businesses. It is typically written over a deductible or self insured retention.
Burglar and Fire Alarm Contractors
provide manuscript General Liability and Errors and Omissions coverage for those operations engaged in the installation, repairing, repair and monitoring of burglar and fire alarms. Our program addresses the need to provide professional and general liability coverage to small to medium sized alarm contractors.
Children's Camp Liability
covers day and resident children's camps for most property and liability needs. Commercial auto, crime and umbrella coverage can be added to the package.
covers liability and physical damage for commercial vehicles licensed for road use.
Commercial General Liability
provide coverage for bodily injury, property damage and personal injury arising from the insured premises, operations and products. Primary policies are available on either an occurrence or a claims-made basis.
provide coverage for all vehicle related operations, completed operations, products liability, and physical damage to customer?s vehicles in the insured?s care, custody, or control.
Health Care Facilities
provide Professional and Commercial General Liability coverage for all primary and alternate health care facilities.
Liquor Law Liability
provide Liquor Law Liability coverage for Alcoholic Beverage license holders.
Membership Club Liability
covers privately owned membership clubs for liability, crime, commercial auto, garage, garage keepers' liability and umbrella coverage.
provide primary and umbrella liability for all municipal operations and can include Law Enforcement Professional Liability
Pharmaceutical and Medical Products
provide a claims-made policy for Bodily Injury or Property Damage Liability claims resulting from medical products liability.
provide coverage for first party product recall expenses and third party liability damages for manufacturers of finished products, component parts and assemblies.
provide coverage for claims brought by third parties alleging sexual misconduct perpetrated by employees or volunteers of the named insured. The alleged perpetrator is covered until he/she is judicially determined to have intentionally caused the harm asserted.
provide professional liability and general liability coverage for a variety of social services operations, including rehabilitation, mental health care, adoption, elder care and case management.
provide coverage for one time events on a primary and excess casualty coverage basis.
Trucking, Buses, Charter & School Transit, and Public Autos for hire
covers liability, physical damage, and cargo for commercial vehicles licensed for road use.
provide Guaranteed Cost, Retrospectively Rated, Dividend and Small and Large Deductible Plans geared toward Workers' Compensation buyers interested in more risk transfer than risk assumption.
Strategic Actions to Improve Food Safety
By David R. Butcher
January 21, 2010
Food safety and traceability have been important issues for years. Although improvements have
been made to ensure safety throughout the product value chain, manufacturers must continue to re-examine their processes to reduce the impact of food safety incidents.
Last week, Michael Taylor was appointed the Food and Drug Administration's (FDA) deputy
commissioner for foods. On Wednesday, the veteran food expert told members of the Northwest Food Processors Association, which held its annual conference in Oregon, that change won't happen quickly.
Ensuring food safety can be a daunting task. Nonetheless, food safety, compliance, product recalls and brand reputation have forced manufacturers to re-examine the ability to provide enterprise-wide traceability, according to a recent Aberdeen Group report.
Late last year, the Aberdeen Group examined the experiences and intentions of more than 185 organizations focused on product quality and traceability. The study showed the ways that "best-in-class" food manufacturers work to reduce the impact of food safety incidents. The research looked at how these manufacturers collaborate with suppliers, gain intelligence on quality metrics and produce compliant products to lower the number of recalls and improve the customer experience.
"Food safety is one of the most pressing issues in the industry today, and at the heart of it we find traceability and closed-loop quality management as key technology enablers," coauthor Matthew Littlefield, a senior research analyst at the Aberdeen Group, said in an announcement of the report. "Food safety is truly an end-to-end business process, starting at raw materials, moving through manufacturing operations, to distribution, and finally ending at the point of consumption."
The Aberdeen Group says that the focus now is on developing product and process traceability throughout a product's life cycle, and that "best-in-class" organizations are maintaining food safety across all process stages.
Aberdeen's analysis found that "best-in-class" companies (the top 20 percent of respondents) are gaining significant competitive advantages, not just over "laggards (the bottom 30 percent) but also "industry average" firms (the remaining 50 percent surveyed). These findings are based on four criteria: products in compliance; complete and on-time shipments; overall equipment effectiveness (OEE), or metric accounting for availability, performance and quality; and response time to non-conforming shipments.
The Aberdeen report indicated which strategic actions and business process capabilities are enabling best-in-class organizations to outperform the rest.
Foremost, organizations should have compliance and traceability already built into production processes, enabling companies to have critical information for improved decision making, such as how a product was manufactured and what equipment was used. Moreover, food safety and traceability issues need to be on the executive agenda.
Once compliance and traceability are integrated into production processes and executive focus has been established, industry-average companies are advised to take the following actions to improve performance in food safety:
Leverage cross-functional continuous-improvement teams. Best-in-class organizations are more likely than others to have a cross-functional continuous-improvement team focused on product quality and traceability. Aberdeen advises that companies maintain the food and beverage industry's leadership position in leveraging these teams. In the absence of a cross-functional team with enterprise-wide responsibility, managing enterprise-wide traceability initiatives in today's global manufacturing environment would be especially challenging, if not impossible.
Have visibility and defined responsibility for adverse product events. Best-in-class
manufacturers are nearly twice as likely as laggards to have established role-based visibility and defined responsibilities for adverse product events. If established, this capability can give employees a sense of security and confidence when operating during uncertain times, such as a high-profile product recall or another quality or noncompliance problem. This strategy is more effective when implemented before, rather than after, an adverse event.
Invest in technology across the overall technology stack. Aberdeen advises that organizations identify gaps in their technology stack and begin to fill those gaps with the solutions that will most effectively improve overall food safety and traceability. It is recommended that organizations start with enterprise resource planning (ERP), if it isn't already implemented, as 73 percent of best-in-class companies currently use it. As the organization matures, technology should be introduced whenever it makes sense for the organization. If product development and formulations is a firm's core competency, product lifecycle management (PLM) would be a good investment. If it's manufacturer operations that need improving, manufacturing operations management (MOM) software might be more suitable. If an organization lacks effective quality control, it should focus on a quality management system (QMS).
Contrary to news headlines, food and beverage manufacturers are actually on par or outperforming the industry average in every metric.
"Today we're seeing a growing focus among food and beverage manufacturers to proactively combat risk by implementing automated solutions to ensure food safety, curtail the potential for recalls, and boost overall consumer satisfaction," according to Nikki Willett, VP of Marketing and Regulatory Affairs at Pilgrim Software, which sponsored the Aberdeen report. "Companies that are proactive in dealing with these issues now throughout the product value chain (farm to fork), and focus on implementing new safety solutions, will reap the rewards of greater efficiency and lower cost."
It was one year ago that a salmonella outbreak was linked to peanut products, leading to nine deaths and more than 700 illnesses. The company that produced the products has since declared bankruptcy, lawsuits are pending and food-safety reform awaits a Senate vote.
For now, manufacturers must continue to build compliance and traceability into their production processes, with a focus on creating product and process traceability through every stage of a product's life cycle.
Food Safety and Traceability: Keeping Consumers Healthy and Happy by Matthew Littlefield and Mehul Shah Aberdeen Group, November 2009
Latest Trends in Food Safety and Traceability Pilgrim Software and Aberdeen Group, Dec. 16, 2009
Michael Taylor: Food Regulators Shift Focus to Preventing Outbreaks by Lynne Terry The Oregonian, Jan. 20, 2010
Peanut butter. Ground Beef. Chicken burgers. Chili with beans. Cookie dough. No, I'm not
rattling off my grocery list. Rather, this list of food - many of which may very well appear on our grocery lists - represents some costly product recalls of 2009.
According to the Centers for Disease Control and Prevention, more than 76 million cases of foodborne illness occur each year in the US, resulting in thousands of deaths. These statistics have many, including Congress, increasingly concerned about food safety. Concerns are further fueled by outbreaks like this fall's outbreak of
Salmonella in peanut products, traced to the now-bankrupt Peanut Corporation of America. Deemed
one of the nation's worst known outbreaks of food-borne disease, the contaminated peanut products
involved resulted in nine deaths and 22,500 illnesses and is estimated to cost the peanut
industry more than $1 billion.
READY FOR RECALL by Ed Mitchell, Global Product Recall Manager, XL Insurance and Steve Gruler, CEO, Global Quality Consulting
In 1906, Upton Sinclair's novel The Jungle exposed poor work and unsanitary conditions in the
U.S. meat packing industry. The book prompted social outrage and eventually led to the passage of
landmark legislation including the U.S.'s Meat Inspection Act and the Food and Drug Act, which
led the way for the creation of the Food and Drug Administration (FDA). More than a century
later, stories of food safety and contamination are not central to any novel's plot, but are
making news headlines and are likely to prompt more government intervention in food safety
The interesting aspect of the pending legislation this time is the shift in emphasis on the
government's view of its responsibilities for ensuring food safety. In his weekly address of
March 14, 2009, President Obama commented about his appointment of Dr. Mary Hamburg to the
position of Commissioner of the Food and Drug Administration: "There are certain things only a
government can do. And one of those things is ensuring that the foods we eat, and the medicines
we take, are safe and don't cause us harm."
The price of contamination outbreaks in food can be costly both monetarily and in the loss of
human lives. For instance, consider the estimated $1 billion loss to the U.S. peanut industry as
a result of a salmonella outbreak last year. It led to the biggest food recall in U.S. history.
The U.S. Center for Disease Control and Prevention (CDC) reported that 714 people were sickened
and nine deaths resulted in the outbreak linked to foods using peanut ingredients made by the
now-bankrupt Peanut Corp. of America. According to the CDC, 76 million cases of food-related
illnesses are reported every year with over 300,000 hospitalizations and 5,000 deaths.
As a result of these high profile and deadly cases, food safety has Congress' attention. In March
2009, President Obama established the President's Food Safety Working Group. On July 7, the
Working Group issued its key findings on how to upgrade the food safety system based around three
core principles of prioritizing prevention, strengthening surveillance and enforcement, and
improving response and recovery.
Last November, the Senate unanimously passed the FDA Food Safety Modernization Act (Senate Bill
510). The bill, originally introduced in the Senate in March, is very similar to the Food Safety
Enhancement Act of 2009 (HR 2749), which passed the House in July. In testimony to Congress, Dr.
Hamburg noted how this legislation would transform the U.S.'s approach to food safety from
responding to outbreaks to preventing them.
According to FDA Commissioner, Dr. Hamburg, the new regulations under Congressional discussion
would require and hold companies accountable for understanding the risks to the food supply under
their control and then implementing effective measures to prevent contamination. The legislation
seeks enhanced ability for the FDA to:
Require sanitation and preventive controls at food facilities (based on a scientific hazard
analysis); Access basic food safety records at facilities; Keeping roof drains clear of debris to prevent build-up or pooling of water; Establish basic standards for preventive controls; Require facilities to conduct hazard analyses; Implement preventive controls; and Require companies to have a comprehensive food safety plan. Perhaps of most significance is that the bill also aims to grant the FDA the ability to require
mandatory food recalls in certain situations. Currently, other than a few exceptions, recalls are
carried out on a voluntary basis. This proposal would take the ultimate decision for a recall
away from food companies.
In addition to potential regulatory changes, food companies also need to look at the improved
methods of linking food borne illness outbreaks to particular producers. In the past, linking
illnesses across multiple states to a common cause was like finding a needle in a haystack. The
CDC however is now increasingly able to trace and link these outbreaks through improved data
passed on by hospitals and health practitioners. A few years ago, companies may have not realized
that their products were making consumers sick — due to the lack of scientific evidence — and
therefore would not initiate a recall. Today, there is a greater likelihood that outbreaks will
be traced back to the company or companies responsible for the contaminated product causing the
Going forward, recalls will not only be about linking actual illnesses to culprit products. They
will also hinge upon how a company implement's FDA's new preventive measures. Rather than waiting
for either consumer complaints or finished product positive test results to determine a recall, a
company may be required to recall if the FDA determines that the company's product was
manufactured in unsanitary conditions in breach of food regulations. It may be determined that
those conditions created the potential for products to be adulterated, even if there may be no
evidence in consumers or the end product itself.
Already this year, there have been several cases along these lines including the FDA's
announcement in the first week of January about its intentions to ask a federal court to shut
down a New Jersey cheese manufacturer. The company had an alleged history of operating under
unsanitary conditions and producing cheese contaminated with Listeria monocytogenes.
How the practicalities of implementing the FDA's requirements end up will depend on the outcome
of the Food Safety Enhancement Act once it comes before the Senate this year. However, should
mandatory recalls become part of legislation, it will be critical for food companies to be on top
of their game when it comes to food safety and recall preparedness.
IMPROVING QUALITY AND READINESS
Most companies in the food industry have solid systems in place and make these activities part of
their day-to-day risk management efforts. For those that don't however, these efforts to update
out-of-date food safety regulations should be more than enough impetus. Businesses involved in
the growth, production or preparation of food will need to reinforce their quality and risk
management strategies to not only avoid food safety issues but also to financially prepare
themselves to respond quickly in the event of a product recall.
For food producers, having proactive quality systems in place is a key risk management strategy
in preventing contamination from happening. It can also help minimize reputation damage. Well
risk-managed food companies will no longer view food safety as seeking compliance to a regulatory
minimum standard but will instead be looking to get ahead of the game. Correctly implemented
HACCP (Hazard Analysis Critical Control Points) plans that focus on the most relevant food safety
and brand equity risks to the business and risk-based supplier management systems are two
effective and proactive tools in mitigating risk to food companies' recall exposure and brand.
In today's global market, the supply chain presents significant risk management challenges.
Having an appropriate traceability and recall plan in place is critical to managing supply chain
risks. At a minimum, companies are required by the Bioterrorism Act to have a traceability plan
that adheres to the "one step up, one step down" principle so that the company can immediately
know both the person from whom the product (or its ingredients) came and the next person to whom
it has gone.
For years food companies have relied on certificates of analysis as a confirmation of food safety
for their supplied goods. Companies can, however, go even further to improve that risk by
building in testing programs for supplied ingredients and products as well as carrying out
appropriate due diligence of suppliers such as site risk reviews, obtaining critical performance
data as well as food safety and GMP audits. The Peanut Corp of America recall is a salutary
reminder of the importance of knowing how safe supplied ingredients are.
Even companies with excellent food safety may need to review their risk management efforts. With
the likelihood of the FDA having access to company recordkeeping, it will be increasingly
important to be able to demonstrate that a company has a good handle on the scope and severity of
a recall should one be necessary. This means implementing an effective sanitation, testing, lot
coding and batch management program in order to minimize the potential size of a recall. Given
the potential for incurring enormous costs in recalling a product, it is vital that a food
company can quickly provide the right data to the FDA to be able to isolate and segregate
contaminations and to ensure that the FDA will agree with the company's data. If a company cannot
demonstrate to the FDA where a contamination began and ended, there is a much higher chance that
the recall's scope can effectively be left open-ended. Recalling a few weeks worth of product may
be manageable for some companies. Recalling a year's worth of product, which has been seen over
the last few years in a number of cases in the U.S., could be financially devastating not to
mention ruinous from a reputation standpoint.
A PLAN OF ACTION
A sound food safety program, traceability system, recall and crisis plan and business continuity
plan should be part of a food company's risk management strategy. Prioritizing prevention is
critical and is one of the three core principles of the President's Food Safety Working Group.
Being prepared to handle the crisis is of huge importance also because a company will be judged
by the regulators, the media and consumers on its ability to manage a recall well. Ultimately a
company's reputation lies in the hands of these three groups in a time of crisis.
While Product Contamination insurance is available to address the direct and indirect costs
involved in the recall of food products, it is important to look at how coverage responds to
addressing the expense and implementation of crisis management. For insurance providers, the
question is not only how they can help prepare their clients to handle a recall but also how to
assist them in addressing the changing regulatory requirements to ensure the implementation of
best practices for managing a crisis. This is why Product Contamination insurers see value in not
only providing their clients with coverage to help pay for a range of specialist recall and
crisis consultants but often offer upfront guidance to develop an appropriate plan of action to
handle a recall.
While Product Contamination insurance is available from a growing number of insurers, it is
estimated that only a small percentage of food companies are carrying the coverage. That might
change given the current regulatory atmosphere. In fact, some industry leaders believe that, as a
result of possible mandatory recalls, recall insurance or other financial protection may become a
regulatory requirement itself in due course.
While traditional Product Contamination insurance will be more of a necessity in the food
industry's risk management plans, greater attention to quality control and advance crisis
management planning is of equal and growing importance. Being prepared for a product recall in
advance of it happening could be the difference between disaster and a client's survival. =======
The recent Toyota auto recall headlines, and other major recall cases from the last year, have
caused companies involved in manufacturing or food processing to reevaluate whether they need to
purchase product recall insurance, according to companies in the product recall insurance arena.
"We are seeing a real uptick in the past few weeks from component part manufacturers inquiring
about coverage," says Eric MacDougall, senior vice president of MRM Group, a company that
specializes in product recall coverage for small manufacturing and food industries.
MacDougall also points out that there has been an increase in the number of contracts that
require recall insurance, either in the form of indemnification agreements or proof of recall
Product recalls have become much more common in the last few years. The Federal Drug
Administration had 18 food and drug recalls from Feb. 1 through Feb. 19 and there were 21 listed
for February on the Consumer Product Safety Commission Web site as of Feb. 23.
The jump in product recalls has led to an increase in awareness of product recall coverage by
manufacturing and food and beverage companies, according to underwriters.
Product recall insurers have also come to realize that food and component part manufacturers have
a bigger exposure than they originally thought. Companies can get parts or ingredients from many
different sources, which makes tracing the cause of a contamination or product malfunction
difficult. Because of this, insurers have changed the rating base and the underwriting process to
address questions like: Where is the product going? What is the shelf life of the product? What
are the history and safety practices of the company that provided an ingredient or part for the
"There is more complexity in these accounts than we originally thought," MacDougall says.
"[Addressing these questions] will make the coverage a lot more expensive, which is the next step
of the process."
MacDougall expects to see an uptick in the pricing structure of these accounts as insurers see
the fallout and headlines of product recalls and consumers become more anxious about what they
are buying and from whom.
Capacity is a major issue for the product recall marketplace because of the high loss ratio.
Currently, Chartis and Lloyd's of London are the largest product recall insurers. More companies
have ventured into this area in the last few years, such as Liberty Mutual which entered the
marketplace in 2008, and XL, which established a product recall facility in London in 2006. Last
year, C.V. Starr and Crum & Forster came in, and Zurich also has a U.S. product recall operation
and launched a UK facility in mid-February. The recent capacity additions are mainly in the food
and manufacturing industries. Auto manufacturing is still very limited and will likely remain
that way, according to experts.
MRM Group works with Lloyd's and becomes a coverholder for the carrier in the United States on
March 1. The new status will give MRM the ability to work with agents nationwide on a broader
scope and offer higher limits and pricing without needing to get London approval first, unless it
has anything to do with the auto industry.
"Over the past couple of weeks we have had to refer anything that has an auto exposure to our
lead underwriters before we can quote," MacDougall says. "Anything that is auto related has to be
signed off on and that probably won't change."
Carriers provide different product recall forms because every recall policy contains nonstandard
wording and each carrier has different recall appetites. That is why it is important for agents
to be knowledgeable about the marketplace and their clients' needs so they can provide the right
scope of coverage.
"[Agents] need to know where the markets are, what their respective appetites consist of and what
loss control engineering they are capable of," says Louis Lubrano, SVP of Liberty International
Underwriters Global Crisis Management.
Lubrano says agents also need to be aware of a client's recall exposure in the first place, as he
finds one of the biggest mistakes agents make in this segment is not adequately addressing the
recall exposures of their client base, particularly in the food business.
PUBLIC RELATIONS SERVICES
In January, Crump Insurance Services, Inc., a wholesale broker that has been placing product
recall coverage for over 10 years, released PRODUCTSplus, a general liability and product recall
combined form. The coverage is targeted toward the manufacturing industry and includes crisis
management services from Specialty Risk Management, loss of gross profits, and recall expenses
both first and third party, all of which are not typically included on the general ISO recall
"If an insured has a recall, unless they have a recall/crisis management contingency plan in
place, they typically don't know where to turn," says David Fiske, senior vice president at
Crump. "Crump's product includes both the recall coverage component and the prearranged services
of an on-call crisis management firm to help the insured navigate through the entire recall
Public relations coverage is touted as a big benefit of a recall package because it ensures
proper handling of the publicity if and when a recall occurs. The belief is that customers of the
product recall insured are more likely to be forgiving if the company comes out and owns the
problem and provides solutions quickly rather than mismanaging the situation, something Toyota is
now being accused of.
MRM Group also provides crisis management with its product recall coverage and approaches
accounts with a comprehensive package that includes loss prevention steps.
Many companies do not understand the full cost of a product recall and do not purchase the
coverage because they do not think it is something they will need, say underwriters. But they
warn that while claims can be infrequent, they are severe when they happen and brokers must put
that into context for their insureds.
When a claim occurs, "It's a multiple loss," MacDougall says. "There is not just the expense of
the recall. The larger part of the claim can be the loss of revenue when a customer stops buying
from the company that has the recall. That company can lose millions of dollars in sales over
Ultimately, it could be how a company handles the recall situation that decides whether it has a
fighting chance to survive.
In the case of Toyota, it is likely that the automaker is self-insured for product recall
coverage, which is typical of large auto manufacturing companies. The company will no doubt see
many claims from all angles, including consumers, dealers, and state attorneys general, to name a
few. Attorney Mark Bunim, chairman of Case Closure, LLC a legal firm that provides mediation and
arbitration services, expects the legal and financial repercussions will drag on for Toyota,
especially with consumers who will be wary of the automaker.
"It will be awhile before consumers want to buy Toyotas again," Bunim says.
If you are concerned about the expense to recall defective products, whether they are food or widgets, contact me about Product Recall coverage.
Please review carefully!
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