Contaminated Products
Insurance (CPI) / Recall
Risk Appetite
Preferred:1. Food, beverage and nutraceutical manufacturers,
processors, contract manufacturers (co-packers),
wholesale and retail companies
2. Restaurant trade
3. White, brown goods, consumer goods, non-safety critical
auto and other non-industrial equipment (on a case by
case basis)
We decline to quote:1. Toy and children’s equipment manufacturers or distributors
2. Pharmaceutical
3. Safety Critical Auto
What does the Policy cover?
1.
Accidental Product Contamination
2.
Malicious Product Tampering (MPT)
3.
Product Extortion Demand
(Annual Aggregate Limit Applies)
What does the Policy cover?
“Accidental Product Contamination” shall mean:(a)
Any unintentional error other than an error in design or specification
made by the Insured; or
(b)
The introduction of an ingredient or component supplied by a third
party that is contaminated;
which occurs during manufacture, blending, mixing, compounding, packaging,
labelling including the instructions for use, storage or distribution of any
Insured Product whilst in the care or custody of the Insured, provided that in
the event of its consumption or use as intended it would lead to or has led to
Bodily Injury within 366 days of its consumption or use, or would lead to or
has led to physical property damage to tangible property (other than the
Insured Product itself) owned by a third party.
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What does the Policy cover?
“Bodily Injury” shall mean:clearly identifiable internal and/or external physical symptoms of
sickness, disease or death sustained by any person, animal or
Livestock resulting from any of the foregoing at any time. Bodily
Injury does not extend to include mental anguish or emotional
distress.
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Contamination Classifications – Class I, II, III
Classification Definition Example
Class I
This type of recall involves a health hazard where a reasonable probability exists that eating the food would cause serious,
adverse health consequences or death.
[Meat contaminated with L. monocytogenes in a ready-to-eat food product; E. coli O157:H7 in raw beef; allergens such as
peanuts or eggs (not listed on the label).]
Class II
This type of recall indicates a potential health hazard where a remote probability of adverse health consequences from eating
the food exists, or if the resulting condition is temporary or medically reversible.
[Presence of FD&C Yellow #5 dye in candy; presence of dry milk, a Class II allergen, as an ingredient in sausage without
mention of the dry milk on the label.]
Class III
This type of recall involves situations in which eating the food will not or is not likely to cause adverse health consequences.
[A package containing fewer or lower weight products than shown on the package label or improperly labelled processed meat
in which added water is not listed on the label as required by federal regulations.]
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Recall – Legal
Canadian Food Inspection Agency Act
14.2.8 Issuance of a Mandatory Recall Order
Where is the authority to issue a mandatory recall order?
The CFIA Act states:
19. (1) Where the Minister believes on reasonable grounds that a
product regulated under an Act or provision that the Agency
enforces or administers by virtue of section 11 poses a risk to
public, animal or plant health, the Minister may, by notice served
on any person selling, marketing or distributing the product, order
that the product be recalled or sent to a place designated by the
Minister.
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Recall – Legal
When is a mandatory recall order issued?
The Minister issues a mandatory recall order when the Minister believes on
reasonable grounds that a product poses a risk to public, animal or plant health.
The reasonable grounds are generally based upon information received from the
CFIA Office of Food Safety and Recall.
The CFIA Office of Food Safety and Recall recommends a mandatory recall to the
Minister when they are notified by the Area Recall Coordinator (ARC) that an
operator refuses to voluntarily recall a product (regulated under an Act that the
Agency enforces or administers) that poses a risk to public, animal or plant health.
Inspectors notify the ARC when a product is in distribution that poses a risk to
public, animal or plant health. In the event of a mandatory or voluntary recall the
inspector completes the verification task(s) related to the cause of the recall and
references the recall in the CFIA/ACIA 5472 Inspection Report - Corrective Action
Request (CAR) issued to the operator.
For additional recall information, refer to the Food Emergency Response Manual
available by contacting the CFIA's Office of Food Safety and Recall.
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Recall – Legal Changes
Safe Food for Canadians Act: An Overview
Legislative modernization was one of the commitments under that plan. In 2009,
the Report of the Independent Investigator into the 2008 Listeriosis Outbreak (the
Weatherill Report) recommended that the Government “modernize and simplify
federal legislation and regulations that significantly affect food safety.” The
commitment to update legislation was reconfirmed in the 2010 Speech from the
Throne and this intent was reiterated in the report "Action on Weatherill
Recommendations to Strengthen the Food Safety System: Final Report to
Canadians". The tabling of this bill builds on action taken to address these
commitments.
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Recall – Legal Changes
Safe Food for Canadians Act: An Overview
What the proposed legislation will do
The proposed legislation will consolidate food provisions now administered and
enforced by the Canadian Food Inspection Agency under four statutes into the Safe
Food for Canadians Act to strengthen oversight of food commodities being traded
inter-provincially or internationally. The Food and Drugs Act will continue to exist
separately, providing overarching protection for consumers from any foods that are
unsuitable for consumption, including those marketed exclusively within provinces.
The proposed Act focuses on three important areas:
1. Improved food safety oversight to better protect consumers,
2. Streamlined and strengthened legislative authorities, and
3. Enhanced international market opportunities for Canadian industry.
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Recall – Legal Changes
Safe Food for Canadians Act: An Overview
The need for change
Food in Canada is currently regulated under a suite of different statutes;
•Food and Drugs Act
•Fish Inspection Act, Meat Inspection Act
•Canada Agricultural Products Act
•Consumer Packaging and Labelling Act
These Acts were created at various times over several decades, and have been
updated at differing frequencies. While these food statutes have served Canadians
well, the time has come to create new tools to manage today’s risks to food safety,
while ensuring that Canadian industry has continued opportunities in international
trading markets.
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Recall – Legal Changes
Safe Food for Canadians Act:
An adjunct to the Safe Food for Canadians Act is the Improved Inspection Food
Model being proposed under the proviso of Inspection Modernization for the
Canadian Food Inspection Agency (CFIA) that is currently out for comment. Under
this new model, CFIA food inspection would be based on risk and the following five
components.
1. Licensing/registration
2. CFIA oversight
3. Inspection
4. Compliance and enforcement
5. System performance
(Brodsky Consultants)
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Recall – Legal Changes
Safe Food for Canadians Act: Conclusion
•The Canadian food industry will benefit by having a single inspection system
applicable to all food products and segments of food processing and distribution.
•Although there will be a common set of rules, there is sufficient flexibility to
address individual concerns.
•The onus of the requirement to develop preventative control plans as a preamble
for licensing/registration may create challenges for some companies.
(Brodsky Consultants)
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Recall – Legal Changes
Safe Food for Canadians Act: Preventative Control Measures
The preventative control plan would need to address the following eight elements,
as appropriate:
•
physical structure and maintenance
•
equipment design and maintenance
•
employee hygiene and training
•
sanitation and pest control
•
product/process control
•
transportation and storage
•
traceability and recall
•
company verification processes
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Pre-Recall & Recall Costs Covered
Costs to Establish
Recall Costs
Post Recall Costs
• Identify cause
• Media costs
• Loss of Gross Income
• Analysis
• Transport costs
• Cleaning costs
• Laboratories/Testing
• Storage costs
• Repair costs
• Crisis Consultants
• Replacement costs
• Staff costs (not working)
• Redistribution costs
• Additional cost of working
• Staff overtime
• Rehabilitation costs
Cause of Loss
• Additional staff costs
• Slotting fees
• Destruction costs
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Confusion – Insurance Terminology
17
What does the Policy cover?
“Malicious Product Tampering” shall mean the actual or
threatened intentional, malicious and wrongful alteration or
adulteration of the Insured Product, or the creation of Adverse
Publicity implying such, whether in conjunction with a Product
Extortion Demand or not so as to give the Insured or consumers
reasonable cause to consider the Insured Product unfit or
dangerous for their intended use or to create such impression to
consumers and public alike.
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What does the Policy cover?
“Product Extortion Demand” shall mean any threat or connected
series of threats received by the Insured to commit Malicious
Product Tampering for the purpose of soliciting Product Extortion
Monies. Underwriters will reimburse the Insured, subject to the
Limit of Liability as specified in the Schedule, for Product Extortion
Costs.
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Main Suspects for MPT and Extortion

Suspects for MPT
•
Employees
•
Aggrieved employees
•
People with mental health issues
•
Aggrieved customer
•
Single issue groups (animal rights)

Suspects for Extortion
•
People in debt
•
Aggrieved at “mis-treatment” by company
•
People with mental health issues
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Events Not Covered
Competitor’s Product(s)
Any Accidental Product Contamination, Malicious Product
Tampering or Product Extortion Demand of a competitor’s
product(s) which is similar to an Insured Product of the Insured,
creating Adverse Publicity, or loss of public and/or governmental
confidence and/or change of regulation relating to any Insured
Product or any substance or material used in or similar to any
Insured Product;
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A Final Point to Note
IMPORTANT!
Confidentiality
The Insured shall not disclose the existence of this Policy, its
terms, conditions, limitations or exclusions, unless agreed by
Underwriters or required to do so by law.
22
Main Causes of Contamination
Types of Contamination
1.
2.
3.
4.
5.
Microbiological
Cross-Contamination (microbiological, allergen)
Physical / Foreign Body (metal, glass, stones, etc.)
Chemical
Allergens (milk, eggs, peanuts, tree nuts, fish, shellfish,
soya, wheat)
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Main Causes of Contamination
Microbiological
Clostridium Botulinum a bacteria producing a toxin in food responsible for
botulism, the deadly paralytic nerve illness
Shigella is the most common food that these bacteria can contaminate
include: salads (potato, chicken, seafood, vegetable), raw vegetables,
milk and other dairy products, and meat products especially poultry
Staphylococcus Aureus can be found in custard or cream-filled baked
goods, ham, poultry, eggs, potato salad, cream sauces, sandwich fillings
Vibrio Vulnificus is a free-living ocean bacteria that can cause food borne
illnesses from contaminated seafood. Especially dangerous in the warm
weather months when eating shellfish that are undercooked or raw
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Main causes of contamination
Microbiological
Campylobacter – the most common cause of food related fever, diarrhea,
abdominal cramp, found in intestines of healthy birds, undercooked
meats/cross contamination with raw/cooked food
Salmonella causes fever, diarrhea, abdominal cramp – can KILL - found in
intestines of birds, reptiles, mammals and spreads via a variety of different
foods
Escherichia coli (E. coli O157:H7) causes severe bloody diarrhea, painful
abdominal pains - can KILL - found in reservoir of cattle microscopic amounts
of cow feces found in food/water (fecal E-coli)
Calicivirus (Norovirus and Norwalk-like viruses) causes acute gastrointestinal
illness, vomiting, diarrhea and is transferred from person to person, infected
kitchen workers, found in salads, sandwiches, etc.
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Campylobacter
Salmonella
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E. coli O157/H7
Calicivirus
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Main Causes of Contamination
Microbiological
Listeria (bacteria) – 6 species – Killer Pathogen
1.L
2.L
3.L
4.L
5.L
6.L
grayi
innocua
ivanovii
monocytogenes
seeligeri
welshimeri
-responsible for listeriosis – lethal food-borne illness
-fatality rate of 25%
-hibernate when frozen and able to grow at fridge temp.
-spreads through the nervous system and can cause meningitis
-found in soil, stream water, sewage, plants
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Listeria Monocytogenes
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Underwriting Considerations / Risk Assessment
Sales turnover
•
Consider number of plants
•
Consider number of production lines
•
What capacity does the plant(s) run at?
Product Exposure
•
Diversification on brands
•
Highly diversified
•
Branded
•
Own label
Quality Assurance
•
QA in place?
•
Dedicated personnel
•
Formal QA specifications – ISO 22000, HACCP
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Underwriting Considerations / Risk Assessment
Product Packaging
•
Is product tamper evident?
•
If not consider type of business, such as meat production for food service
(boxed and bagged)
Product Testing
•
Visual – in line to end line
•
X ray, Metal Detection
•
Micro-biological
•
Testing Laboratory (In House or 3rd Party)
•
Raw / In Coming materials tested
•
Suppliers’ quality standards monitored
Audits
•
Audits performed – in house and by 3rd party food safety auditors
•
Frequency
•
Recommendations
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Underwriting Considerations / Risk Assessment
Plans
•
Recall Plan (no recall plan for food and beverage risks = no cover)
•
Crisis Management Plan (a company that produces branded product should
have a CMP)
•
Are plans regularly updated and tested?
•
Batch coding and traceability?
History
•
Health warning letter?
•
Health authority press release?
•
Class III recalls (no adverse health consequences)
•
Class II recalls (probable health hazard)
•
Class I recalls (reasonable health hazard)
–
Every Element Carries a Rate + Underwriting Judgement
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Food Safety
Hazard Analysis Critical Control Point
(HACCP)
1959 First works, NASA wanted to produce safe food for
astronauts
1963 World Health Organisation issue principles (Codex
Alimentarius – 150 country membership)
•
Conduct hazard analysis
•
Determine critical control points (CCP)
•
Establish critical limits
•
Establish a system to monitor control of CCPs
•
Establish corrective action plan to CCP found not to be under control
•
Establish procedures for verification to confirm HACCP is working
•
Establish documentation concerning all procedures and records
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Product Batch & Traceability
•
Traceability is now a recognised feature within international food
safety
•
USA authorities demand that product be traced within 4 hours, but
generally completed within 2 hours
•
Batch quantities and values essential to understanding Insured
operation(s)
•
Number of facilities, production lines and geographic spread of
operations are a guide to how extensive the result of a recall can be
•
Fresh produce batching – beware of the pitfalls of where a
contamination might occur (Policy does not cover crop)
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Crisis Management
No
Incident
Occurs
Analyse
Facts By
Mgmt
Continue to Monitor
Situation
– if necessary
CMT Required?
Incident Finished
No
Yes
Yes
Call CMT
Quick Review Of CRM/PRP – confirm R&Rs Review HACCP Plan – Review
Information on Product and manufacturing process
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Accidental Product Contamination
M
Maple Leaf
2008 – Listeria Monocytogenes found in cooked deli meats
 Maple Leaf foods announced a massive recall of 243 types of
ready to eat meat products supplied to stores, restaurants
and cafeterias.
 Estimated loss CAD 75m (uninsured)

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Accidental Product Contamination
XL Foods Recall
•
•
•
•
•
2012 – E.Coli 0157:H7
A number of illnesses recorded in Canada and USA
Over 1,500 products being recalled with many products
processed for 3rd parties (Own Brands)
Since the beginning of the recall XL Foods has refused to
give interviews to the press – lack of crisis awareness and a
communication strategy
Estimated loss yet to be determined. Largest meat recall of
any Canadian food company to date
37
Accidental Product Contamination
Peanut Corporation of America Filed Chapter 7 Bankruptcy
•
•
•
•
•
•
•
2008 – Salmonella Typhimurium in peanut butter & peanut butter
paste
714 documented illnesses in 46 states (USA)
9 deaths
Peanut products an ingredient in many products processed by 3rd
parties
One of the largest recalls in USA history
Management of PCA allegedly knew product unsafe, but still
shipped
Estimated loss yet to be determined. Estimated at USD 1.5bn
combined
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Accidental Product Contamination
Cadbury Salmonella Recall
• The 250g Dairy Milk Turkish
• Dairy Milk Caramel
• Dairy Milk Mint bars
• Dairy Milk 8 chunk and the 1kg Dairy Milk bar
• Dairy Milk Buttons Easter Egg
• Freddo bar
• Leaking waste pipe at Cadbury's Marlbrook chocolate crumb plant
• Leak was sourced in January 2006. Authorities informed in June 2006
• Estimated loss excess of GBP 55m
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Accidental Product Contamination
?
or
Tomato Recall / Jalapeno Peppers
•2008 – Salmonella Saintpaul found in salsa
•1,017 cases in 41 states (USA), of which 384 cases in Texas alone
•Largest USA salmonellosis outbreak since 1985
•FDA put pressure on food industry to recall tomatoes, resulting in
destruction of that year’s Florida tomato industry
•Two weeks later identified as jalapeno peppers from Mexico
•Estimated loss unknown, but USD millions
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MPT Threat








Lucozade owned by GlaxoSmithKline
Animal Liberation Front (ALF) – single issue group
Threat to contaminate Lucozade with urine
5m bottles in UK recalled
No urine found
Lucozade Sport – rehabilitated brand
Introduction of tamper evident seals
Estimated loss of GBP 10m
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Accidental Product Contamination
42
Is this a dangerous lunch?
1. What is dangerous
about this lunch to an
asthma sufferer?
2. Is there anything,
other than the knife,
that poses a health
threat?
43
Is this event covered by CPI?
In February 1990 the company was forced to recall all 160 million bottles on
store shelves around the world after significant amounts of the carcinogen
benzene were discovered in its water
 The dirty filter that caused the problem was replaced but consumers outside
France were without the product for about 10 weeks, which is “forever” by
marketing standards.
 The company president called it ''a brutal crisis'' and the disaster gave Evian a
foothold in the lucrative US bottled-water market

Estimated loss unknown
 Loss to brand – massive – never recovered market share

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Presentation Name
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