September 9, 2024 • 19 mins
Imagine the financial and logistical nightmare of discovering that a single contaminated ingredient has infiltrated multiple food products across your supply chain. That's exactly what we're examining with John O'Malley and Chris Martin from CRC Group's Minneapolis office. This episode unravels the complex web of costs and liabilities that ensue from food recalls, using real-world incidents to stress the importance of proactive risk management and the critical role of comprehensive recall insurance to safeguard against these multifaceted challenges. We share essential strategies, from stringent quality control processes to implementing test and hold policies, we discuss how to ensure contaminated products never reach consumers. Don't miss this episode—subscribe and share!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Amanda Knight (00:01):
A food product.
Recall can be costly for a foodmanufacturer, but what if the
contaminated food is shipped toother manufacturers and used in
other products?
What if those products then hitretail shelves?
Today, scott and I are joinedby John O'Malley, a broker with
CRC Group's Minneapolis office,where he specializes in product
(00:22):
recall risks office, where hespecializes in product recall
risks.
Joining John is Chris Martin,also a casualty broker and
president of our Minneapolisoffice, also specializing in
product recall.
They're going to talk with ustoday about how retail agents
can help food manufacturersidentify their potential risk
and take steps to minimizerecall damage exposure.
(00:44):
This is the Placing you Firstpodcast from CRC Group.
Scott Gordon (00:48):
This podcast features news and insights from
a vast knowledge base of over5,100 associates.
Amanda Knight (00:54):
Who write more than $35 billion in premium
annually.
Plus, we give you the latestinformation on what's happening
at CRC.
This, this, this is the Placingyou.
John O'Malley (01:03):
First podcast and now the hosts of the podcast,
Amanda Knight and Scott Gordon.
Amanda Knight (01:09):
Welcome back to the podcast guys.
It's good to have you back.
John O'Malley (01:11):
Thanks for having us.
Scott Gordon (01:13):
Yeah, you guys will get the like in SNL when
they give you the five timersclub.
You guys are on your way.
So some of our more popularguests today.
So let's start off with alittle question.
According to Consumer Affairsanalysis of FDA data, there were
578 food products recalled inthe first six months of 2024.
(01:38):
We looked at the top 10 ofthose food recalls.
Can either of you guess whichfood group five of those 10 were
?
Chris Martin (01:49):
man, I would say how about, uh, like leafy greens
maybe?
I?
John O'Malley (01:55):
I was gonna say the same leafy greens some meat
maybe the answer is uh, dairy ofsome kind, cheese, yogurt, whey
, et cetera.
Salad greens were two more ofthe 10.
So yeah, things that tends toperish quickly, I think is the
theme.
Amanda Knight (02:13):
Well, I was actually going for dairy as the
correct answer if we want to betechnical about it, like some
form of dairy product, dairyproduct.
Interestingly enough, though,if you read the companion
article that goes with thispodcast, you'll remember we
mentioned a cheese manufacturer.
That was one of our examples inthat article.
Three of those fivedairy-related recalls that hit
(02:37):
the top 10 list were connected,so a cheese manufacturer had to
recall cheese that had alreadybeen distributed and used in
other products like salad kits,burritos, etc.
So that triggered two of theother recalls on that top 10
list for the first half of 2024.
(03:00):
Chris, to see, really, you knowwhat I would consider or I
guess the whole world wouldconsider big recalls if they
made the top 10 connected inthat way where you've got one
that just spawns another andanother.
Chris Martin (03:12):
Yeah, I think for sure it is.
And I think recently we've seenthe last few years with the
popularity of salad kitsincreasing.
I think those have beenparticularly susceptible to this
.
Like they, they tend to have alot of issues because you're
throwing just a bunch ofdifferent products together and
(03:32):
they're, all you know, sort ofperishable in that same way.
So that can that can be anissue.
And then the other one you knowthat's obviously a big deal is
any kind of ingredient.
So these ingredients, that, andyou know, and the more basic
the ingredient, probably themore of a risk there is.
Like, so if you get down tothings like you know, spices and
(03:54):
things like that, that canreally go into a number of
different products.
And if there's an issue withthe spice, then there's an issue
with everything that it hasgone into and they can trace
those back.
So those tend to be a big deal.
John O'Malley (04:09):
Yeah, I think.
And just in recent history Iremember a large peanut butter
recall and a large oatmealrecall.
Both of those became very largejust because they were
incorporated into so manydifferent things.
You know, peanut butterobviously is incorporated into
other snacks and crackers andcandy and things like that, so
it goes a long way.
(04:30):
You might think of peanutbutter just in a jar, but it's
also used as an ingredient in somany other things and so those
recalls tend to spiral and getvery large very fast.
Amanda Knight (04:40):
So let's make it easy to sort of let someone wrap
their mind around how fast, infact, this can ripple outward.
So, john, I'm going to tag youin here in a second Walk us
through what happens if a poundof cheese worth $20, I guess
that's some expensive cheesemakes it out of the factory and
let's say it were to hit 500salad kits or be in the vicinity
(05:04):
of the line where 500 saladkits are produced.
So that cheese is going a longway if we're putting it in that
many salads.
But that's a different issue.
That 20 pound, or that $20pound of cheese right, that one
pound has now hit all of thosesalad kits.
So if we've got a $20 hunk ofcheese and 500 impacted salad
(05:30):
kits, that original $20 loss isnow worth how much.
John, did you know you werehaving a math quiz today?
John O'Malley (05:38):
Oh man, let me get my calculator.
Yeah, certainly that's howthese things kind of happen.
Obviously, the cheese itselfmight be innocuous to the cheese
manufacturer.
$20 pound of cheese, if thatthing doesn't make it out of the
factory, okay, he's out $20.
But if that $20 pound of cheeseis now spread across so many
(05:59):
salad kits let's say 500 saladkits in this case worth $5 each
that pound of cheese is nowincorporated into all those
salad kits.
So you got $20.
That's now into 500 salad kitsworth $5 each.
That's now a $2,500 loss.
That cheese manufacturer isobviously responsible for those
(06:19):
salad kits now that their cheeseis now contaminated.
So let's just make that alittle bit bigger.
Let's think of 1,000 pounds ofcheese going into 500,000 salad
kits.
That obviously gets very bigvery fast and that cheese
manufacturer is going to be onthe hook.
Scott Gordon (06:36):
Yikes, it's like when I get my five-cheese pizza.
It's like, technically,four-fifths of that pizza is
still edible, but I cannot eatit because it's mixed in with
the bad stuff.
So there goes, all those fivecheese pizzas, right, that's
right, you're really rolling thedice, I know right, but hey, I
like what I like.
(06:57):
I just bragged on you guys abouthow you brought great real
world examples to our wonderfullittle podcast here, so do
either of you have any otherexamples of recalls that have
had either a widespread impactbeyond the initial manufacturer
or things you've dealt withpersonally?
Chris Martin (07:14):
I guess I would say I mean there's a couple that
are just jump out, like thepeanut corporation of America
recall from years back, wherethat's a peanut butter recall,
but I mean it really hit a lotof different products.
I mean you had cliff barsgetting recalled because of that
and you know just many other.
You know products that gotlooped into that one.
(07:36):
And then I can also think ofone that we wrote that was a
powdered milk manufacturer andthat ended up getting into.
You know quite a few.
I mean you have dried milkproduct in any number of
products that you don't evenknow.
It's in there.
But it's in there in mostthings, almost, so that one was
(07:58):
really widespread as well.
John O'Malley (07:59):
Yeah, and I think , just for me personally, the
peanut butter one kind ofaffected me as well, as the
oatmeal one affected me as well,just for having young kids.
All these ingredients areincorporated to a lot of snacks
that kids eat.
So you know you have to gothrough your pantry and make
sure that you check the labelsand see if any of these products
(08:21):
were associated with therecalls, and some of it was so.
On a personal level, theserecalls have definitely affected
me in the last five years or so.
Amanda Knight (08:32):
So, knowing that food contamination can have
serious health even, obviously,life or death consequences, what
advice would you guys give to afood manufacturer or
distributor facing their firstmajor recall?
How do we help them keep theimpact as small as possible?
John O'Malley (08:53):
I think it starts with trying to prevent an
incident from ever occurring.
So that would start with, youknow, great quality control
processes and thenpost-contamination procedures,
making sure everything's onpaper, everything is easy to
follow for the employees and theworkers at these facilities,
(09:16):
and making sure they're doingthe right things from the start,
certain tests and wholeprocedures in place.
There are certain things theycan do to help prevent an
occurrence from happening in thefirst place.
So a robust test and holdpolicy, which means inventory
doesn't leave until it's beencleared of testing of
contaminants and can ensure thata contaminated product never
(09:40):
reaches a store shelf or anothermanufacturer's assembly line.
Certainly, if a contaminationdoes happen, it's essential to
have procedures in place to actquickly, reduce the exposure,
and that sort of quick, decisiveaction can help preventing the
recall from extending outsideand going into other retailers
and manufacturers.
And then, of course, you know,leveraging recall insurance and
(10:04):
covering those third-partylosses.
Product recall insurance, youknow, protects against a wide
range of recall costs, includingthe product loss, revenue loss
fines, judgments and evenreputational rehabilitation
costs.
Policies should also cover theimpacted third parties, such as
retailers, distributors andother food manufacturers that
(10:26):
might be using the insureds asingredients in their products.
So many policies also includeservices to help mitigate the
impact of recall.
For instance, the crisisconsultants that are retained in
these policies can help theclients run through pre-event
services and procedures, such asquality control programs and
(10:51):
the recall programs, runningthrough mock recalls with them
to make sure they're ready forwhen an event might happen.
Scott Gordon (10:59):
Well, and this might be a little redundant on
that, but can you walk usthrough the process of
determining the right level ofrecall insurance for a
manufacturer?
Chris Martin (11:07):
Yeah, I guess I would say it's a pretty
complicated process and itreally, you know, depends a lot
on the kind of company and thekind of you know process and
outfit that we're talking about,because there isn't, like a lot
of you know, really goodbenchmarking rules for this type
of insurance, because you needto look at so many different
(11:29):
factors.
But I think some of the thingsthat we we look at are, you know
, for, for starters, what is theproduct?
You know, do you have a reallywide spread of products?
So is it a company that makes14 different kinds of products
or is it a company that makesone type of product?
So you have, you know, $20million in sales?
Is that all one thing or is itspread out between a number of
(11:52):
things?
Like, that's one part of it.
Another part of it might bewhether or not they have
multiple manufacturingfacilities.
So if you just have onefacility and all your $20
million of revenue goes throughthat one facility, that probably
makes a difference too, becauseyou can have an environmental
issue and that's very unlikelyto affect more than one place at
(12:14):
a time.
So that can have a factor on it.
Seasonality of products canhave a factor, so you might have
like something like apples inthe Northwest or something like
that.
That's got a very seasonalexposure where you're going to
have a really high quantity ofyou know.
A big percentage of youroverall revenue is going to come
(12:37):
off in a few months time andthen slow down over the over the
rest of the year.
So there's a number of factorsthat can play into it for sure.
Amanda Knight (12:47):
Um, when you're looking at that, knowing,
knowing how dangerous a recallcan be, depending on whatever
illness is connected orcontamination is connected, are
companies required by regulatoryagencies to carry this kind of
insurance, or is this voluntary?
Chris Martin (13:05):
I would say less likely that they're required by
government agencies to carry it,but a lot more likely that
they're required by customers intheir contracts to carry it.
So that can happen quite a bit,particularly driven from big
(13:25):
retail outlets.
So we see a lot of this with,like the Costco's of the world
and things like that, demandingthat that people buy recall
insurance or you know, even likemore, you know just where
you're in the in the chain ofsupplier and you know and buyer
you're in the chain of supplierand buyer.
So a lot of times they'll putthat into a contract that they
(13:47):
have to have insurance for this,and almost every time, honestly
, even if some of these requireinsurance, but almost all of
them require that you beresponsible, If you're not
buying insurance, that's fine,but you still owe us for these
kinds of expenses should youcause them.
So either way, the insurancecan help a lot.
Scott Gordon (14:10):
How can partnering with a CRC group producer help
agents with food manufacturingor distribution insurance?
Chris Martin (14:18):
Yeah, I think, john.
I think we'd like to say thatwe have a lot of experience in
this line of coverage.
I've been at it for 20 yearsplus now, and John's been at it
for seven or eight, so this hasbeen something that we've been
dedicated to for a long time.
I think what I would say isthat this line of coverage has
(14:39):
evolved a lot and continues toevolve pretty quickly.
You've got new markets, newforms, new coverage grants,
things like that that we'rekeeping track of.
We have great relationships inthe market with our underwriting
partners and we have greatrelationships with claims teams
(15:00):
at those carriers.
So all those things you know,we think help facilitate, you
know, a good relationship and agood outcome.
John O'Malley (15:10):
I think the specialization and the
experience that we have in thespace you know, we stay on top
of market events and trends andin a niche space like product
recall, things are constantlyevolving.
So having someone in yourcorner that stays on top of
those things things areconstantly evolving, so having
someone in your corner thatstays on top of those things I
think is vital.
Scott Gordon (15:27):
Well, we love having you guys on.
You're great, and I know thatyou only come on for one reason,
and that is to do our rapidfire at the end here, where you
get your questions.
Amanda comes up with thequestions and Amanda this first
one really speaks to me.
Here we go, guys.
I knew it would.
Is there a legend, myth orconspiracy theory out there that
(15:50):
you really want to believe,that you secretly hope is real,
and if so, what is it?
Chris Martin (15:57):
Bigfoot Bigfoot's a good call.
Loch Ness Monster maybe.
I feel like, is there one thatI don't want to be true?
I think you can go that way.
Yeah, I would say Bigfoot's agreat call.
That'd be awesome if we justsomehow just found Bigfoot,
Wouldn't that be great?
I think maybe the Area 51 stuffwith the aliens too.
(16:22):
Like I don't know.
Scott Gordon (16:23):
I'm always, you know, a big alien conspiracy guy
, so well, a few years ago Idon't know if you guys remember
this, but there was a storyabout these guys in Georgia,
these hunters who claimed thatthey had caught, killed and
frozen a Bigfoot and they had itin a cooler and they were going
to reveal it at a newsconference.
And where I was working, we allgot together and watched and of
(16:45):
course it's fake, but it lookedreal and I was like guys, this
is real.
And I just went overboard and Ideclared and I have it on the
calendar and I want to say it'sAugust 15th, national Bigfoot
Day.
It's on my calendar and Icreated it and I think it's
coming up.
Amanda, I think it's thiscoming week.
Amanda Knight (17:03):
I'll have to double-check, I'm surprised you
had to create it and therewasn't already one.
Scott Gordon (17:07):
There probably is, but I'd like to think that my
version is better.
Amanda Knight (17:11):
You're the OG.
Scott Gordon (17:12):
And Facebook plug.
I actually have a page, a groupon Facebook called the Church
of the Divine Bigfoot.
It's got like seven people.
I created it like 10 years ago.
I don't know whether it's stillthere or not, but look it up.
Um, so yeah, bigfoot for me, abig, big foot.
Um, okay, our second question.
Sorry to derail that, picturethis you have your own late
(17:35):
night talk show.
Okay, who do you invite as yourfirst guest?
And it could be anyonecelebrity, athlete, historical
figure.
You know, the first people thatcome to my mind are just normal
talk show.
Okay, who do you invite as yourfirst guest?
John O'Malley (17:40):
and it could be anyone celebrity, athlete,
historical figure you know, thefirst people that come to my
mind are just normal people.
Would be my brothers.
I think that would just be fun,um that is so sweet I.
I don't know if that'd beentertaining enough for
everybody.
They might get bored, but forme it would be fun.
I don't know, chris, you gotanybody?
Chris Martin (17:59):
I, I guess I'd go like Lee Harvey Oswald.
Like I, I'm still on the firstquestion.
I think I'm still on the firstquestion, I'm still stuck there,
you're bringing them together,we're bringing them together,
yeah.
Amanda Knight (18:14):
Well, thank you both for being here.
We love having repeat guests.
If John and Chris soundfamiliar, they were also guests
on our episode about themodernization of cosmetics
regulation act, so if youhaven't given that one a listen,
definitely do that next Ifyou're a listener.
Thank you for joining us.
We appreciate you.
Don't forget to subscribe andshare.
(18:35):
Providing current insights intothe marketplace is just one
more way CRC Group is placingyou first.
A food product.
Recall can be costly for a foodmanufacturer, but what if the
contaminated food is shipped toother manufacturers and used in
other products?
What if those products then hitretail shelves?
Today, scott and I are joinedby John O'Malley, a broker with
CRC Group's Minneapolis office,where he specializes in product
(00:22):
recall risks office, where hespecializes in product recall
risks.
Joining John is Chris Martin,also a casualty broker and
president of our Minneapolisoffice, also specializing in
product recall.
They're going to talk with ustoday about how retail agents
can help food manufacturersidentify their potential risk
and take steps to minimizerecall damage exposure.
(00:44):
This is the Placing you Firstpodcast from CRC Group.
Scott Gordon (00:48):
This podcast features news and insights from
a vast knowledge base of over5,100 associates.
Amanda Knight (00:54):
Who write more than $35 billion in premium
annually.
Plus, we give you the latestinformation on what's happening
at CRC.
This, this, this is the Placingyou.
John O'Malley (01:03):
First podcast and now the hosts of the podcast,
Amanda Knight and Scott Gordon.
Amanda Knight (01:09):
Welcome back to the podcast guys.
It's good to have you back.
John O'Malley (01:11):
Thanks for having us.
Scott Gordon (01:13):
Yeah, you guys will get the like in SNL when
they give you the five timersclub.
You guys are on your way.
So some of our more popularguests today.
So let's start off with alittle question.
According to Consumer Affairsanalysis of FDA data, there were
578 food products recalled inthe first six months of 2024.
(01:38):
We looked at the top 10 ofthose food recalls.
Can either of you guess whichfood group five of those 10 were
?
Chris Martin (01:49):
man, I would say how about, uh, like leafy greens
maybe?
I?
John O'Malley (01:55):
I was gonna say the same leafy greens some meat
maybe the answer is uh, dairy ofsome kind, cheese, yogurt, whey
, et cetera.
Salad greens were two more ofthe 10.
So yeah, things that tends toperish quickly, I think is the
theme.
Amanda Knight (02:13):
Well, I was actually going for dairy as the
correct answer if we want to betechnical about it, like some
form of dairy product, dairyproduct.
Interestingly enough, though,if you read the companion
article that goes with thispodcast, you'll remember we
mentioned a cheese manufacturer.
That was one of our examples inthat article.
Three of those fivedairy-related recalls that hit
(02:37):
the top 10 list were connected,so a cheese manufacturer had to
recall cheese that had alreadybeen distributed and used in
other products like salad kits,burritos, etc.
So that triggered two of theother recalls on that top 10
list for the first half of 2024.
(03:00):
Chris, to see, really, you knowwhat I would consider or I
guess the whole world wouldconsider big recalls if they
made the top 10 connected inthat way where you've got one
that just spawns another andanother.
Chris Martin (03:12):
Yeah, I think for sure it is.
And I think recently we've seenthe last few years with the
popularity of salad kitsincreasing.
I think those have beenparticularly susceptible to this
.
Like they, they tend to have alot of issues because you're
throwing just a bunch ofdifferent products together and
(03:32):
they're, all you know, sort ofperishable in that same way.
So that can that can be anissue.
And then the other one you knowthat's obviously a big deal is
any kind of ingredient.
So these ingredients, that, andyou know, and the more basic
the ingredient, probably themore of a risk there is.
Like, so if you get down tothings like you know, spices and
(03:54):
things like that, that canreally go into a number of
different products.
And if there's an issue withthe spice, then there's an issue
with everything that it hasgone into and they can trace
those back.
So those tend to be a big deal.
John O'Malley (04:09):
Yeah, I think.
And just in recent history Iremember a large peanut butter
recall and a large oatmealrecall.
Both of those became very largejust because they were
incorporated into so manydifferent things.
You know, peanut butterobviously is incorporated into
other snacks and crackers andcandy and things like that, so
it goes a long way.
(04:30):
You might think of peanutbutter just in a jar, but it's
also used as an ingredient in somany other things and so those
recalls tend to spiral and getvery large very fast.
Amanda Knight (04:40):
So let's make it easy to sort of let someone wrap
their mind around how fast, infact, this can ripple outward.
So, john, I'm going to tag youin here in a second Walk us
through what happens if a poundof cheese worth $20, I guess
that's some expensive cheesemakes it out of the factory and
let's say it were to hit 500salad kits or be in the vicinity
(05:04):
of the line where 500 saladkits are produced.
So that cheese is going a longway if we're putting it in that
many salads.
But that's a different issue.
That 20 pound, or that $20pound of cheese right, that one
pound has now hit all of thosesalad kits.
So if we've got a $20 hunk ofcheese and 500 impacted salad
(05:30):
kits, that original $20 loss isnow worth how much.
John, did you know you werehaving a math quiz today?
John O'Malley (05:38):
Oh man, let me get my calculator.
Yeah, certainly that's howthese things kind of happen.
Obviously, the cheese itselfmight be innocuous to the cheese
manufacturer.
$20 pound of cheese, if thatthing doesn't make it out of the
factory, okay, he's out $20.
But if that $20 pound of cheeseis now spread across so many
(05:59):
salad kits let's say 500 saladkits in this case worth $5 each
that pound of cheese is nowincorporated into all those
salad kits.
So you got $20.
That's now into 500 salad kitsworth $5 each.
That's now a $2,500 loss.
That cheese manufacturer isobviously responsible for those
(06:19):
salad kits now that their cheeseis now contaminated.
So let's just make that alittle bit bigger.
Let's think of 1,000 pounds ofcheese going into 500,000 salad
kits.
That obviously gets very bigvery fast and that cheese
manufacturer is going to be onthe hook.
Scott Gordon (06:36):
Yikes, it's like when I get my five-cheese pizza.
It's like, technically,four-fifths of that pizza is
still edible, but I cannot eatit because it's mixed in with
the bad stuff.
So there goes, all those fivecheese pizzas, right, that's
right, you're really rolling thedice, I know right, but hey, I
like what I like.
(06:57):
I just bragged on you guys abouthow you brought great real
world examples to our wonderfullittle podcast here, so do
either of you have any otherexamples of recalls that have
had either a widespread impactbeyond the initial manufacturer
or things you've dealt withpersonally?
Chris Martin (07:14):
I guess I would say I mean there's a couple that
are just jump out, like thepeanut corporation of America
recall from years back, wherethat's a peanut butter recall,
but I mean it really hit a lotof different products.
I mean you had cliff barsgetting recalled because of that
and you know just many other.
You know products that gotlooped into that one.
(07:36):
And then I can also think ofone that we wrote that was a
powdered milk manufacturer andthat ended up getting into.
You know quite a few.
I mean you have dried milkproduct in any number of
products that you don't evenknow.
It's in there.
But it's in there in mostthings, almost, so that one was
(07:58):
really widespread as well.
John O'Malley (07:59):
Yeah, and I think , just for me personally, the
peanut butter one kind ofaffected me as well, as the
oatmeal one affected me as well,just for having young kids.
All these ingredients areincorporated to a lot of snacks
that kids eat.
So you know you have to gothrough your pantry and make
sure that you check the labelsand see if any of these products
(08:21):
were associated with therecalls, and some of it was so.
On a personal level, theserecalls have definitely affected
me in the last five years or so.
Amanda Knight (08:32):
So, knowing that food contamination can have
serious health even, obviously,life or death consequences, what
advice would you guys give to afood manufacturer or
distributor facing their firstmajor recall?
How do we help them keep theimpact as small as possible?
John O'Malley (08:53):
I think it starts with trying to prevent an
incident from ever occurring.
So that would start with, youknow, great quality control
processes and thenpost-contamination procedures,
making sure everything's onpaper, everything is easy to
follow for the employees and theworkers at these facilities,
(09:16):
and making sure they're doingthe right things from the start,
certain tests and wholeprocedures in place.
There are certain things theycan do to help prevent an
occurrence from happening in thefirst place.
So a robust test and holdpolicy, which means inventory
doesn't leave until it's beencleared of testing of
contaminants and can ensure thata contaminated product never
(09:40):
reaches a store shelf or anothermanufacturer's assembly line.
Certainly, if a contaminationdoes happen, it's essential to
have procedures in place to actquickly, reduce the exposure,
and that sort of quick, decisiveaction can help preventing the
recall from extending outsideand going into other retailers
and manufacturers.
And then, of course, you know,leveraging recall insurance and
(10:04):
covering those third-partylosses.
Product recall insurance, youknow, protects against a wide
range of recall costs, includingthe product loss, revenue loss
fines, judgments and evenreputational rehabilitation
costs.
Policies should also cover theimpacted third parties, such as
retailers, distributors andother food manufacturers that
(10:26):
might be using the insureds asingredients in their products.
So many policies also includeservices to help mitigate the
impact of recall.
For instance, the crisisconsultants that are retained in
these policies can help theclients run through pre-event
services and procedures, such asquality control programs and
(10:51):
the recall programs, runningthrough mock recalls with them
to make sure they're ready forwhen an event might happen.
Scott Gordon (10:59):
Well, and this might be a little redundant on
that, but can you walk usthrough the process of
determining the right level ofrecall insurance for a
manufacturer?
Chris Martin (11:07):
Yeah, I guess I would say it's a pretty
complicated process and itreally, you know, depends a lot
on the kind of company and thekind of you know process and
outfit that we're talking about,because there isn't, like a lot
of you know, really goodbenchmarking rules for this type
of insurance, because you needto look at so many different
(11:29):
factors.
But I think some of the thingsthat we we look at are, you know
, for, for starters, what is theproduct?
You know, do you have a reallywide spread of products?
So is it a company that makes14 different kinds of products
or is it a company that makesone type of product?
So you have, you know, $20million in sales?
Is that all one thing or is itspread out between a number of
(11:52):
things?
Like, that's one part of it.
Another part of it might bewhether or not they have
multiple manufacturingfacilities.
So if you just have onefacility and all your $20
million of revenue goes throughthat one facility, that probably
makes a difference too, becauseyou can have an environmental
issue and that's very unlikelyto affect more than one place at
(12:14):
a time.
So that can have a factor on it.
Seasonality of products canhave a factor, so you might have
like something like apples inthe Northwest or something like
that.
That's got a very seasonalexposure where you're going to
have a really high quantity ofyou know.
A big percentage of youroverall revenue is going to come
(12:37):
off in a few months time andthen slow down over the over the
rest of the year.
So there's a number of factorsthat can play into it for sure.
Amanda Knight (12:47):
Um, when you're looking at that, knowing,
knowing how dangerous a recallcan be, depending on whatever
illness is connected orcontamination is connected, are
companies required by regulatoryagencies to carry this kind of
insurance, or is this voluntary?
Chris Martin (13:05):
I would say less likely that they're required by
government agencies to carry it,but a lot more likely that
they're required by customers intheir contracts to carry it.
So that can happen quite a bit,particularly driven from big
(13:25):
retail outlets.
So we see a lot of this with,like the Costco's of the world
and things like that, demandingthat that people buy recall
insurance or you know, even likemore, you know just where
you're in the in the chain ofsupplier and you know and buyer
you're in the chain of supplierand buyer.
So a lot of times they'll putthat into a contract that they
(13:47):
have to have insurance for this,and almost every time, honestly
, even if some of these requireinsurance, but almost all of
them require that you beresponsible, If you're not
buying insurance, that's fine,but you still owe us for these
kinds of expenses should youcause them.
So either way, the insurancecan help a lot.
Scott Gordon (14:10):
How can partnering with a CRC group producer help
agents with food manufacturingor distribution insurance?
Chris Martin (14:18):
Yeah, I think, john.
I think we'd like to say thatwe have a lot of experience in
this line of coverage.
I've been at it for 20 yearsplus now, and John's been at it
for seven or eight, so this hasbeen something that we've been
dedicated to for a long time.
I think what I would say isthat this line of coverage has
(14:39):
evolved a lot and continues toevolve pretty quickly.
You've got new markets, newforms, new coverage grants,
things like that that we'rekeeping track of.
We have great relationships inthe market with our underwriting
partners and we have greatrelationships with claims teams
(15:00):
at those carriers.
So all those things you know,we think help facilitate, you
know, a good relationship and agood outcome.
John O'Malley (15:10):
I think the specialization and the
experience that we have in thespace you know, we stay on top
of market events and trends andin a niche space like product
recall, things are constantlyevolving.
So having someone in yourcorner that stays on top of
those things things areconstantly evolving, so having
someone in your corner thatstays on top of those things I
think is vital.
Scott Gordon (15:27):
Well, we love having you guys on.
You're great, and I know thatyou only come on for one reason,
and that is to do our rapidfire at the end here, where you
get your questions.
Amanda comes up with thequestions and Amanda this first
one really speaks to me.
Here we go, guys.
I knew it would.
Is there a legend, myth orconspiracy theory out there that
(15:50):
you really want to believe,that you secretly hope is real,
and if so, what is it?
Chris Martin (15:57):
Bigfoot Bigfoot's a good call.
Loch Ness Monster maybe.
I feel like, is there one thatI don't want to be true?
I think you can go that way.
Yeah, I would say Bigfoot's agreat call.
That'd be awesome if we justsomehow just found Bigfoot,
Wouldn't that be great?
I think maybe the Area 51 stuffwith the aliens too.
(16:22):
Like I don't know.
Scott Gordon (16:23):
I'm always, you know, a big alien conspiracy guy
, so well, a few years ago Idon't know if you guys remember
this, but there was a storyabout these guys in Georgia,
these hunters who claimed thatthey had caught, killed and
frozen a Bigfoot and they had itin a cooler and they were going
to reveal it at a newsconference.
And where I was working, we allgot together and watched and of
(16:45):
course it's fake, but it lookedreal and I was like guys, this
is real.
And I just went overboard and Ideclared and I have it on the
calendar and I want to say it'sAugust 15th, national Bigfoot
Day.
It's on my calendar and Icreated it and I think it's
coming up.
Amanda, I think it's thiscoming week.
Amanda Knight (17:03):
I'll have to double-check, I'm surprised you
had to create it and therewasn't already one.
Scott Gordon (17:07):
There probably is, but I'd like to think that my
version is better.
Amanda Knight (17:11):
You're the OG.
Scott Gordon (17:12):
And Facebook plug.
I actually have a page, a groupon Facebook called the Church
of the Divine Bigfoot.
It's got like seven people.
I created it like 10 years ago.
I don't know whether it's stillthere or not, but look it up.
Um, so yeah, bigfoot for me, abig, big foot.
Um, okay, our second question.
Sorry to derail that, picturethis you have your own late
(17:35):
night talk show.
Okay, who do you invite as yourfirst guest?
And it could be anyonecelebrity, athlete, historical
figure.
You know, the first people thatcome to my mind are just normal
talk show.
Okay, who do you invite as yourfirst guest?
John O'Malley (17:40):
and it could be anyone celebrity, athlete,
historical figure you know, thefirst people that come to my
mind are just normal people.
Would be my brothers.
I think that would just be fun,um that is so sweet I.
I don't know if that'd beentertaining enough for
everybody.
They might get bored, but forme it would be fun.
I don't know, chris, you gotanybody?
Chris Martin (17:59):
I, I guess I'd go like Lee Harvey Oswald.
Like I, I'm still on the firstquestion.
I think I'm still on the firstquestion, I'm still stuck there,
you're bringing them together,we're bringing them together,
yeah.
Amanda Knight (18:14):
Well, thank you both for being here.
We love having repeat guests.
If John and Chris soundfamiliar, they were also guests
on our episode about themodernization of cosmetics
regulation act, so if youhaven't given that one a listen,
definitely do that next Ifyou're a listener.
Thank you for joining us.
We appreciate you.
Don't forget to subscribe andshare.
(18:35):
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