Once a recall is announced, a company like Telerx can be your point man in assessing the scope of the communication required, and addressing the concerns of your particular customer base. “We start asking questions of our clients immediately,” says Cockrell. “We ascertain the household impact (a few hundred households, millions?), how many units of product are involved, is it a full product line, a specific lot number, is there a particular demographic that we need to focus on, be it children, or the elderly…” And then Telerx staffs accordingly. For instance, a high volume recall can have as many as many as 300 reps engaged one recall program.
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It’s also important to take into account the timing of a recall announcement. “If it’s Friday at 5 p.m., generally you’ll start seeing your volumes (customer queries) rising over the weekend, then Monday, the media pick it up, you get hit hard,” notes Cockrell. A 1,000 percent increase in queries is not uncommon.
It’s advantageous to be ready to handle the influx with as little as 24 hours notice. According to Cockrell, if the news breaks at 5 p.m., Telerx can be ready to answer customer questions by 8 a.m. the next day. Just five to 10 years ago you would merely set up an 800 number, says Cockrell, but today recalls are supported through chat, social media channels, phone, email, web support, etc. “There are so many different ways that consumers can reach you today.”
The bottom line is that in order to protect your brand you have to get the information out there, and be able to address any customer concern in real time. Without those options to assuage fears, whom else might a customer turn to—a lawyer perhaps?
“In some instances, the insurance companies will pay some, if not all of the cost of doing a mock recall.”
– Bernie Steves, managing director of Aon Risk Solutions
Enter The Lawyer
“We have worked closely with all segments of the industry in handling their regulatory crisis management and litigation in food safety,” says Shawn Stevens, an attorney at Gass Weber Mullins, LLC, in Milwaukee.
If you have a recall that results in litigation, call an experienced attorney. Even before you’re involved in a recall, it’s a good idea to call an attorney with expertise in assessing client exposure.
“I’ll come in and do brand protection audits for companies,” comments Stevens. “I can look with a new set of eyes at problems that companies are missing. Sometimes it can be the most basic food safety procedures from an operational standpoint, something that with little or no money can be modified.”
One of the major causes of bankruptcy can be inadequate coverage. “Any insurance policy can be tricky once you look at the fine print,” explains Stevens. Many policies do not cover all the contingencies that a company might face during a recall.
Consider a market withdrawal: You’ve proactively invested it traceability technologies, pathogen detection systems, etc., and you caught a problem and traced it to the source before any outbreak occurred. You retrieved the lots in question and dodged a bullet. But it was expensive, yet, because no formal recall was executed, your recall insurance is not going to pay for a dime of the action taken. “So the company would almost be better off by ignoring the problem until someone gets sick—no company does that of course—but this (gap in coverage) is a huge problem,” says Stevens.
Another scenario: Many policies are written to provide coverage only in the event of a government mandated recall. “The problem here is that every single recall in the history of recalls has been voluntary.” The FDA, mentions Stevens, doesn’t want to be in the position of overreacting, or misidentifying a recall culprit, so they pass the responsibility on to the corporate suspect. They will only strongly suggest to the company that a recall is in order. “So what will happen is these companies, as they always have, will announce a voluntary precautionary recall of their food products, so technically coverage would not be triggered under the policy.”
Going For Broker
For a complete assessment of your recall insurance needs, call a broker.