December 3rd 2007
Chinese manufacturers are beginning to realise that to trade on a
worldwide basis many customers will make it a contractual requirement
for their suppliers buy product recall protection. But this cover will
only be available after comprehensive assessment of the individual risk
by insurers.
Mark Quinn, associate director at Aon, commented on the reaction of the
insurance market: “Undoubtedly there is interest from the insurance
market to offer product recall solutions to manufacturers in expanding
economies and there are markets that see the development of recall
insurance in China as an exciting opportunity, if handled correctly.”
The issue for insurers and brokers alike is developing recall insurance
in a Chinese market that is relatively unsophisticated and only just
coming to terms with the concept of product liability, let alone
product recall - a niche area often written as a standalone product or
as part of a wider liability package. The industry needs to promote
product recall in China at grass roots levels, explaining the different
recall policies available and the requirements of the insurance market
in order to secure cover.
In particular, insurers will demand evidence of testing and controls
throughout the supply chain. This appears to have been lacking in some
cases and contributed to the high level of recalls emanating from the
region. Bad track records will lead to high premiums or refusal to
quote at all.
But effective quality control does not stop with the manufacturers.
Mark advises companies across the supply chain should be conducting due
diligence on suppliers' quality control processes: “Businesses trading
with China need to consider the knock on effect to their business.
Recent EU legislation means that companies are obligated to inform
authorities in the event of a recall and as such should also have
robust checks in place to test products before being released to the
public.”
Aon UK is ranked by A.M. Best as the number one global insurance
brokerage based on brokerage revenues and voted best insurance
intermediary, offering classic car insurance, high value home contents
insurance, entertainment and media insurance and construction site
insurance.
Source: www.1888pressrelease.com