A new report by national law firm Lathrop GPM revealed that approximately two-thirds of U.S. food processors expect an increase in food safety claims over the next year. The report, entitled “Food Processing Trends, Outlook and Guidance Report” surveyed 100 agribusiness executives active in litigation and risk management and found that while 80% of companies believe they are prepared for such an increase, only 43% have internal risk management teams in place to handle important insurance issues.
Additionally, less than half of respondents evaluate their business processes with outside counsel, and just 57% review their insurance policies annually.
“We’ve known for a long time that many businesses don’t have the resources to maintain a deep bench of risk-management talent,” Kim Winter, Lathrop GPM’s partner and insurance recovery and counseling practice group leader, said in the report. “In an environment where food safety claims are rising and change is coming fast and from virtually every direction, business leaders should consider investing in dedicated risk-management professionals, or at minimum, making sure that someone inside the company is designated to know what coverage they have, when policies renew, and what types of policies and requirements for giving notice are in place.”
By doing so, the report offers, these seemingly routine details could be the difference between millions of dollars in coverage or zero coverage.
Among the other key takeaways of the report are that 34% of survey participants strongly agreed and 33% agreed that COVID-19 systematically impacted their company’s approach to worker safety; 46% of respondents filed more than 10 insurance claims in the past year and 70% filed at least one; and 71% believe they have adequate insurance coverage and that they understand how to best leverage the coverage to mitigate risk.
The top reasons for expecting rising food safety claims come from pandemic-related food safety risks evolving from changes in food production and the threat of foodborne illness.
The survey results point to what could be a challenging time for the industry, where the majority of food processors aren’t prepared for what’s to come—even though they expect food safety issues to be prevalent.
“Last year, we saw the agribusiness sector quickly pivot and make incredible changes to manufacturing, production, and nearly every other aspect of their businesses,” said Jay Felton, a partner at Lathrop GPM and leader of the firm’s agribusiness and food industry group. “Now, with the end of the pandemic in sight, industry leaders also need to refocus on the risks that lie beyond.”