Specialist liability insurance provider Delta Insurance NZ has responded to the growing risk of food recalls in New Zealand with a more extensive offering for food manufacturers.
Delta, New Zealand’s largest kiwi-owned insurer, has released a comprehensive White Paper on the subject of food safety risk in the food manufacturing sector, following up on the company’s introduction of a niche insurance offering for food manufacturers last year.
The company’s Chief Executive Officer Craig Kirk says Delta designed the new insurance and prepared the White Paper to fill a perceived need in the sector.
“We had seen an alarming increase in the risks for food producers, most glaringly reflected in a leap in the number of food recalls per capita out of this country which were significantly higher than in Australia.
“At the same time, the world, including New Zealand, is seeing an increase in the prevalence of allergens in food, and those susceptible to them, increasing the number of food safety issues happening.”
The insurance industry had not kept pace with these developments, Kirk adds. “We could also see that existing general liability insurance in the market fell well short of covering the potential risks and damage to companies that could arise from a major food issue.”
Kirk says food manufacturing is a vital part of New Zealand’s economy, representing almost 4% of the country’s total GDP but equating to a staggering 71% of manufactured exports.
“It’s currently worth around $7 billion, with that figure projected to quadruple to almost $30 billion by 2025. The damage in terms of cost and reputation from a significant food crisis or major issue doesn’t just affect the company concerned; New Zealand’s reputation as a high-quality food producer also suffers.”
Kirk says recent alarming instances of food issues in New Zealand included the possible contamination of whey protein concentrate at a Fonterra plant in the Waikato which saw extensive recalls and bans of Fonterra products overseas, the mislabelling of cheese-flavoured Hellers sausages in 2017 that led to a child being hospitalised for severe anaphylaxis, and a similar dairy-contamination of supposedly dairy-free chocolate ingredients in 2019 that led to 12 NZ chocolate-makers having to recall their products.
“Kiwis may also remember the scare around needles being intentionally inserted into Australian strawberries that led to vast amounts of the crop, worth around $12 million, having to be destroyed.”
Delta Insurance NZ Underwriting Manager Dinesh Murali says there is a common misconception that food recall risks were covered by general liability insurance. “In fact, the cover is usually very limited, particularly for smaller enterprises, and doesn’t cover many of the costlier aspects of a food recall, for example.”
Delta’s answer was to create a package for small-to-medium enterprises that combined a number of niche products, says Murali. “It covers damage to health of third parties, financial losses to customers of third parties, the cost of clean-ups for an environmental pollution event, as well as assistance with crisis management, when, for example, medical, counselling or PR support might be required.”
The development of the new product continues Delta’s record of introducing innovative insurance products to the marketplace. In recent times, those offerings have included insurance for drone operators, cyber-security risk management tools, Intellectual Property insurance and business continuity planning support.