In response to the growing financial impact and frequency of product recalls for food and beverage manufacturers, distributors and importers in the U.S. and Europe, American International Group (AIG) today launched NOVI, a web-based service to help companies estimate the cost of recall incidents, and expanded its available accidental contamination coverage limits to $35 million.
On average, 30 class I and II product recalls occur every week in the food and beverage industry in the United States, and another 22 equivalent recalls are reported in Europe, according to AIG analysis of data from the U.S. Department of Agriculture (USDA) and the European Union Rapid Alert System for Food and Feed (RASFF).
Expenses resulting from product contamination requiring a recall can include replacement and destruction costs and lost profit from plant shutdowns, government intervention, and brand damage.
AIG’s NOVI is a web-based service that provides food and beverage companies an estimate of their probable maximum recall loss in the event of an accidental contamination. The estimate uses more than 80 data points and a proprietary methodology based on AIG’s more than 25 years of contaminated product insurance experience, analysis of thousands of recall incidents, and input from food safety consultant, NSF International.
“NOVI helps food and beverage manufacturers make more informed decisions about how to manage their risk,” said Nicky Alexandru, vice president of Crisis Management, Global Casualty, AIG Property Casualty. “These companies are generally aware of the frequency of product recalls. However, they are unsure of the potential magnitude of financial impact from a recall event.”
This free, confidential service is available in six languages to qualified food and beverage manufacturers in 11 countries: United States, United Kingdom, Germany, Austria, Belgium, Canada, Denmark, Italy, Netherlands, Spain, and Switzerland.
AIG began providing contaminated product insurance (CPI) in 1986.