Product recall cover is available now
The costs associated with a product recall are astronomical, so insurers are advising businesses to take out the new cover
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Businesses across South Africa are being urged to take out new insurance
policies to protect them from damage that may occur due to the new Consumer
Protection Bill that kicks in this year.
The bill essentially holds suppliers liable for any damage caused to the
consumer by a faulty good, irrespective of the degree of fault by the supplier.
While previous laws only held producers of these goods liable, the Consumer
Protection Bill rules that producers, as well as importers, retailers and
distributors are also just as responsible.
Another big change to the current consumer protection laws in South Africa is
that the consumer does not need to necessarily prove that there was negligence.
A simple link could result in an entire product being recalled under the new
legislation.
While consumers will be delighted with the clauses of the act, it could spell
out bad news for companies, especially if they suddenly find themselves faced
with product recall.
The Regional Manager of Liabilities Group at AIG South Africa, Keith Marshall
said: "The costs of recalling a product can be astronomical and this, in
addition to reputational damage, could force a business to close its doors."
In response to the higher threat of product recall to a business, insurance
companies are beginning to bring out unique policies to assist their clients
should the need arise. In addition to covering the key expense areas, these
policies also provide expert advice to assist clients through the confusing
bureaucracy involved.
"With goods originating from all over the world, including countries such a
China where quality standards cannot be guaranteed, it is worth being properly
covered," warned Marshall. "Rather let your insurance company protect you
against liability costs."
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