Product recall insurance demand to rise in 2022, lawyers predict

Complex global supply chains, inconsistent regulations across jurisdictions, adoption of automation and the COVID-19 pandemic, will lead to a rise in product recalls, two Borden Ladner and Gervais lawyers said in a recent blog.

“We predict 2022 will see more businesses recognizing the benefit of product-recall insurance, which can cover financial losses due to a recall,” wrote BLG partner George Wray and senior associate Laura Day.

The two noted consumers are increasingly interested in product safety, health and ESG concerns, and that social media groups are “quickly spreading news of potential product deficiencies and recalls.”

Related: Why the industry can expect product recall rates to climb

Costs stemming from recalls can include repair, replacement, legal defense, brand damage and more, they said.

Wray and Day noted products that allow tracking and contact through a manufacturer’s app, website or subscription service have led to consumer demands and recall expectations.

“We’re seeing regulators become more active, leading to greater scrutiny, tougher rules and more product recalls,” they said, and added class-action lawyers “are creatively seeding disputes.”

Feature image by iStock.com/Gumpanat