Remember the exploding cell phone batteries last year in the Samsung Galaxy Note 7 that airlines wouldn't allow on their planes? Or the faulty Takata airbags that impacted at least 19 auto manufacturers and more than 60 million vehicles in 2015? And the more than 30 million GM vehicles that were recalled because of faulty ignition switches in 2014?
These three product recalls alone cost an estimated $34 billion according to a new study from Allianz Global Corporate & Specialty (AGCS), the Allianz carrier that focuses on corporate and specialty business.
The analysis by AGCS, Product Recall: Managing The Impact of the New Risk Landscape, found that "defective product-related risk is the single largest driver of liability claims" with losses from product recalls being the greatest contributor to the cost. Recalls cause both financial and safety risks, and losses have cost insurers more than $2 billion over the last five years. They undermine the public's trust of a product, interrupt sales and business development, and increase the risk of litigation.
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Patricia L. Harman
Patricia L. Harman is the editor-in-chief of Claims magazine, a contributing editor to PropertyCasualty360.com, and chairs the annual America's Claims Event (ACE), which focuses on providing claims professionals with cutting-edge education and networking opportunities. She covers auto, property & casualty, workers' compensation, fraud, risk and cybersecurity, and is a frequent speaker at insurance industry events. Contact her at [email protected]
