Strategic Mechanism for Product Recall
Intervention Brings Product Liability, Recall Risk for Manufacturers
Kyle Langan, 2024
Manufacturers intervene to provide a quantity of supply for a product’s market. However, the process can lead to unforeseen consequences (sometimes it is only unforeseen for the consumer, like the case of Semaglutide). [1] This intervention by the manufacturer can cause a bodily injury worse than the matter it tried to heal in the medical or treatment fields. Iatrogenics refer to this risk, harm caused by the healer [2]; near-death was the Semaglutide reaction, as alleged by a 62-year-old woman, Juanita Gantt. [3]
Commercial General Liability insurance will respond to this type of claim on behalf the manufacturer, so long as the insurer had a transparent understanding of the risk it underwrote at the time of the contract’s purchase. An experienced risk manager can validate the language in the contract, confirming it protects the company properly. This must happen at the time of the insurance purchase, rather than at the time of the loss.
Tactical Response or Strategic Risk Transfer?
A tactical response from the manufacturer could worsen its situation. However, if strategic, its response could prove successful. For example, a successful strategy will almost certainly include a risk transfer mechanism. If it is a very large enterprise, the transfer may come in the form of a captive or risk retention group. However, more practically for middle market or small commercial entities, manufacturers will buy Product Recall Insurance. This policy allows the manufacturer to hit the panic button right away, and react swiftly with its pre-determined strategy.
Any entity that designs, manufactures, distributes, retails, and imports/exports products should consider Product Recall insurance for the successful preparation and deployment of a product recall. After an agreed upon Self Insured Retention is met by the policyholder, vital post-event consultation during the lifecycle of a recall is indemnified by the insurer who wrote the contract, subject to the agreed terms. The interruption, i.e. suspension, slowdown, cessation, shut down of business activities arising out of a covered loss are also paid for or reimbursed with indemnity.
References
[1] Page, M. (2024, September 6). Ozempic Maker sued over claims weight-loss medication led to Woman’s Colon Removal. The Independent. https://www.the-independent.com/news/world/americas/ozempic-side-effects-colon-lawsuit-b2608329.html
[3-4] Schimelpfening, N. (2024, September 10). Ozempic: Woman claims weight loss drug led to colon removal. Healthline. https://www.healthline.com/health-news/ozempic-maker-sued-colon-removal
[2] Taleb, N. N. (2012). Antifragile. Penguin.
[1] WebMD. (n.d.). Mounjaro, Ozempic, Wegovy, Zepbound: How do they differ? WebMD. https://www.webmd.com/obesity/mounjaro-ozempic-wegovy-zepbound-difference