The price of insurance limits in the food and beverage sector has dropped by almost 30% in the past two years due to a softening market, according to Marsh.
A new report, Managing liability in the food and beverage sector, which surveyed 232 food and beverage companies across Europe, found that organisations have responded to the drop by increasing the amount of limits purchased (20% more than in 2004).
Marsh said that while the market is currently soft, the report showed that when it inevitably hardened, many companies would not reduce their amount of limits purchased.
Jeremy Moore, Practice Leader for Product Risk at Marsh, said: “Companies that have experienced a loss of greater than $US5 million don't base their purchasing decisions on just the cost of limits. Since 2000, the amount spent by those that have not experienced a large loss has fallen by $US32 million, while that amount varies over the past six-years for those that have.”
Greater scrutiny from the media and regulators, as well as heavy enforcement of recent legislation, would also result in increased product recalls, meaning a greater reliance on insurance, added the worldwide broker.
Moore said: “European and national regulators have become much more involved with the recall process. The launch of the ‘General Framework Law for Food Safety Regulation' in 2005, which stipulates that regulators must be involved at the first sign of a product being unsafe, has resulted in 60% of recalls of all food and non-food related products being government enforced – with major variations between different countries.”
