Contaminated meat claims linked with the horsemeat scandal are now reaching insurers despite clauses that limit liability within product recall policies.
Liability in product recall insurance tends to hinge on whether a product would or could cause either property damage or bodily harm. With horsemeat causing neither, insurers had been expected to have limited exposure beyond recall policies.
However, sources within the London market have reported that claims have already been lodged with insurers. One Lloyd’s source told Post: “Claims have been made, but whether they get anywhere is a different story.”
Julie Ross, vice president of crisis management at Liberty Mutual Insurance Europe, added: “It’s very early days and it may be that none of these are covered when they come to be adjusted. But, typically, you need to tell your insurer when something comes up that may lead to a claim.”
Post understands the UK’s product recall market is dominated by a handful of firms including Ark, Canopius, Kiln, Liberty, Manchester Underwriting, Sagicor and XL. There is a market consenus that claims have been received, however, Ark, Sagicor, Manchester Underwriting, Liberty and Kiln all denied receiving any claims. Canopius declined to comment and XL had not responded as Post went to press.
One senior London market source suggested claims are inevitable where losses have been suffered but added insureds may be seeking to test wordings that limit liability. They said: “To a certain extent the policy language is untested but there is the potential that property damage could be used.” Noting that the presence of horsemeat as a third-party agent could be used to suggest products themselves had been damaged, the source added: “That’s not the intention of the wording.”
Manchester Underwriting London market director David Eynon suggested it would be difficult to link the horsemeat to damage or bodily harm triggers, noting some claims may fall under product liability or guarantee offerings. However, he added his firm had looked into offering a product guarantee policy but could not see a “viable” way of underwriting such a product profitably. “It is very difficult to contain exposures so that we don’t get hit every time there’s a bad smell,” he said.
A spokeswoman from the Food Standards Agency confirmed that only one product has been found to contain the veterinary medicine phenylbutazone, also known as bute – the presence of which had been suggested as a possible trigger for coverage. In sufficient doses bute can cause a serious blood disorder in humans. It was banned after it was found that one in 30 000 people suffered serious side effects.
The discovery of bute in Asda ‘Smart Price’ corned beef was revealed on 9 April. The product had been withdrawn from shelves on 8 March.
Speaking to the House of Commons on Monday, food minister David Heath said testing had shown more than 99% of processed beef products to be clear of horse DNA at more than 1%. Heath and the Health Secretary Jeremy Hunt are expected to announce a strategic review of the overall handling of the horsemeat scandal.
“This will be wide ranging, to restore and maintain consumer confidence in the food chain and consider the responsibilities of food businesses, and practice, throughout the wider food chain, including: audit, testing, food authenticity, food safety and health issues,” Heath said.
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