Risk Appetite Preferred:- 1. Food, beverage and nutraceutical manufacturers, processors, contract manufacturers (co-packers), wholesale and retail companies 2. Restaurant trade 3. White, brown goods, consumer goods, non-safety critical auto and other non-industrial equipment (on a case by case basis) We decline to quote:- 1. Toy and children’s equipment manufacturers or distributors 2. Pharmaceutical 3. Safety Critical Auto
What does the Policy cover? 1. Accidental Product Contamination 2. Malicious Product Tampering (MPT) 3. Product Extortion Demand (Annual Aggregate Limit Applies)
What does the Policy cover? “Accidental Product Contamination” shall mean:- (a) Any unintentional error other than an error in design or specification made by the Insured; or (b) The introduction of an ingredient or component supplied by a third party that is contaminated; which occurs during manufacture, blending, mixing, compounding, packaging, labelling including the instructions for use, storage or distribution of any Insured Product whilst in the care or custody of the Insured, provided that in the event of its consumption or use as intended it would lead to or has led to Bodily Injury within 366 days of its consumption or use, or would lead to or has led to physical property damage to tangible property (other than the Insured Product itself) owned by a third party. 5
What does the Policy cover? “Bodily Injury” shall mean:- clearly identifiable internal and/or external physical symptoms of sickness, disease or death sustained by any person, animal or Livestock resulting from any of the foregoing at any time. Bodily Injury does not extend to include mental anguish or emotional distress. 6
Contamination Classifications – Class I, II, III Classification Definition Example Class I This type of recall involves a health hazard where a reasonable probability exists that eating the food would cause serious, adverse health consequences or death. [Meat contaminated with L. monocytogenes in a ready-to-eat food product; E. coli O157:H7 in raw beef; allergens such as peanuts or eggs (not listed on the label).] Class II This type of recall indicates a potential health hazard where a remote probability of adverse health consequences from eating the food exists, or if the resulting condition is temporary or medically reversible. [Presence of FD&C Yellow #5 dye in candy; presence of dry milk, a Class II allergen, as an ingredient in sausage without mention of the dry milk on the label.] Class III This type of recall involves situations in which eating the food will not or is not likely to cause adverse health consequences. [A package containing fewer or lower weight products than shown on the package label or improperly labelled processed meat in which added water is not listed on the label as required by federal regulations.] 7
8 Recall – Legal Canadian Food Inspection Agency Act Issuance of a Mandatory Recall Order Where is the authority to issue a mandatory recall order? The CFIA Act states: 19. (1) Where the Minister believes on reasonable grounds that a product regulated under an Act or provision that the Agency enforces or administers by virtue of section 11 poses a risk to public, animal or plant health, the Minister may, by notice served on any person selling, marketing or distributing the product, order that the product be recalled or sent to a place designated by the Minister.
9 Recall – Legal When is a mandatory recall order issued? The Minister issues a mandatory recall order when the Minister believes on reasonable grounds that a product poses a risk to public, animal or plant health. The reasonable grounds are generally based upon information received from the CFIA Office of Food Safety and Recall. The CFIA Office of Food Safety and Recall recommends a mandatory recall to the Minister when they are notified by the Area Recall Coordinator (ARC) that an operator refuses to voluntarily recall a product (regulated under an Act that the Agency enforces or administers) that poses a risk to public, animal or plant health. Inspectors notify the ARC when a product is in distribution that poses a risk to public, animal or plant health. In the event of a mandatory or voluntary recall the inspector completes the verification task(s) related to the cause of the recall and references the recall in the CFIA/ACIA 5472 Inspection Report - Corrective Action Request (CAR) issued to the operator. For additional recall information, refer to the Food Emergency Response Manual available by contacting the CFIA's Office of Food Safety and Recall.
10 Recall – Legal Changes Safe Food for Canadians Act: An Overview Legislative modernization was one of the commitments under that plan. In 2009, the Report of the Independent Investigator into the 2008 Listeriosis Outbreak (the Weatherill Report) recommended that the Government “modernize and simplify federal legislation and regulations that significantly affect food safety.” The commitment to update legislation was reconfirmed in the 2010 Speech from the Throne and this intent was reiterated in the report "Action on Weatherill Recommendations to Strengthen the Food Safety System: Final Report to Canadians". The tabling of this bill builds on action taken to address these commitments.Report of the Independent Investigator into the 2008 Listeriosis OutbreakAction on Weatherill Recommendations to Strengthen the Food Safety System: Final Report to Canadians
11 Recall – Legal Changes Safe Food for Canadians Act: An Overview What the proposed legislation will do The proposed legislation will consolidate food provisions now administered and enforced by the Canadian Food Inspection Agency under four statutes into the Safe Food for Canadians Act to strengthen oversight of food commodities being traded inter-provincially or internationally. The Food and Drugs Act will continue to exist separately, providing overarching protection for consumers from any foods that are unsuitable for consumption, including those marketed exclusively within provinces.Safe Food for Canadians Act The proposed Act focuses on three important areas: 1.Improved food safety oversight to better protect consumers, 2.Streamlined and strengthened legislative authorities, and 3.Enhanced international market opportunities for Canadian industry.
12 Recall – Legal Changes Safe Food for Canadians Act: An Overview The need for change Food in Canada is currently regulated under a suite of different statutes; Food and Drugs Act Fish Inspection Act, Meat Inspection Act Canada Agricultural Products Act Consumer Packaging and Labelling Act These Acts were created at various times over several decades, and have been updated at differing frequencies. While these food statutes have served Canadians well, the time has come to create new tools to manage today’s risks to food safety, while ensuring that Canadian industry has continued opportunities in international trading markets.
13 Recall – Legal Changes Safe Food for Canadians Act: An adjunct to the Safe Food for Canadians Act is the Improved Inspection Food Model being proposed under the proviso of Inspection Modernization for the Canadian Food Inspection Agency (CFIA) that is currently out for comment. Under this new model, CFIA food inspection would be based on risk and the following five components. 1. Licensing/registration 2. CFIA oversight 3. Inspection 4. Compliance and enforcement 5. System performance (Brodsky Consultants)
14 Recall – Legal Changes Safe Food for Canadians Act: Conclusion The Canadian food industry will benefit by having a single inspection system applicable to all food products and segments of food processing and distribution. Although there will be a common set of rules, there is sufficient flexibility to address individual concerns. The onus of the requirement to develop preventative control plans as a preamble for licensing/registration may create challenges for some companies. (Brodsky Consultants)
15 Recall – Legal Changes Safe Food for Canadians Act: Preventative Control Measures The preventative control plan would need to address the following eight elements, as appropriate: physical structure and maintenance equipment design and maintenance employee hygiene and training sanitation and pest control product/process control transportation and storage traceability and recall company verification processes
Pre-Recall & Recall Costs Covered 16 Costs to Establish Cause of Loss Identify cause Analysis Laboratories/Testing Crisis Consultants Recall Costs Media costs Transport costs Storage costs Replacement costs Redistribution costs Staff overtime Additional staff costs Slotting fees Destruction costs Post Recall Costs Loss of Gross Income Cleaning costs Repair costs Staff costs (not working) Additional cost of working Rehabilitation costs
Confusion – Insurance Terminology 17
What does the Policy cover? “Malicious Product Tampering” shall mean the actual or threatened intentional, malicious and wrongful alteration or adulteration of the Insured Product, or the creation of Adverse Publicity implying such, whether in conjunction with a Product Extortion Demand or not so as to give the Insured or consumers reasonable cause to consider the Insured Product unfit or dangerous for their intended use or to create such impression to consumers and public alike. 18
What does the Policy cover? “Product Extortion Demand” shall mean any threat or connected series of threats received by the Insured to commit Malicious Product Tampering for the purpose of soliciting Product Extortion Monies. Underwriters will reimburse the Insured, subject to the Limit of Liability as specified in the Schedule, for Product Extortion Costs. 19
Main Suspects for MPT and Extortion Suspects for MPT Employees Aggrieved employees People with mental health issues Aggrieved customer Single issue groups (animal rights) Suspects for Extortion People in debt Aggrieved at “mis-treatment” by company People with mental health issues 20
Events Not Covered Competitor’s Product(s) Any Accidental Product Contamination, Malicious Product Tampering or Product Extortion Demand of a competitor’s product(s) which is similar to an Insured Product of the Insured, creating Adverse Publicity, or loss of public and/or governmental confidence and/or change of regulation relating to any Insured Product or any substance or material used in or similar to any Insured Product; 21
A Final Point to Note IMPORTANT! Confidentiality The Insured shall not disclose the existence of this Policy, its terms, conditions, limitations or exclusions, unless agreed by Underwriters or required to do so by law. 22
Main Causes of Contamination Types of Contamination 1. Microbiological 2. Cross-Contamination (microbiological, allergen) 3. Physical / Foreign Body (metal, glass, stones, etc.) 4. Chemical 5. Allergens (milk, eggs, peanuts, tree nuts, fish, shellfish, soya, wheat) 23
Main Causes of Contamination Microbiological Clostridium Botulinum a bacteria producing a toxin in food responsible for botulism, the deadly paralytic nerve illness Shigella is the most common food that these bacteria can contaminate include: salads (potato, chicken, seafood, vegetable), raw vegetables, milk and other dairy products, and meat products especially poultry Staphylococcus Aureus can be found in custard or cream-filled baked goods, ham, poultry, eggs, potato salad, cream sauces, sandwich fillings Vibrio Vulnificus is a free-living ocean bacteria that can cause food borne illnesses from contaminated seafood. Especially dangerous in the warm weather months when eating shellfish that are undercooked or raw 24
Main causes of contamination Microbiological Campylobacter – the most common cause of food related fever, diarrhea, abdominal cramp, found in intestines of healthy birds, undercooked meats/cross contamination with raw/cooked food Salmonella causes fever, diarrhea, abdominal cramp – can KILL - found in intestines of birds, reptiles, mammals and spreads via a variety of different foods Escherichia coli (E. coli O157:H7) causes severe bloody diarrhea, painful abdominal pains - can KILL - found in reservoir of cattle microscopic amounts of cow feces found in food/water (fecal E-coli) Calicivirus (Norovirus and Norwalk-like viruses) causes acute gastrointestinal illness, vomiting, diarrhea and is transferred from person to person, infected kitchen workers, found in salads, sandwiches, etc. 25
27 E. coli O157/H7Calicivirus
Main Causes of Contamination Microbiological Listeria (bacteria) – 6 species – Killer Pathogen 1. L grayi 2. L innocua 3. L ivanovii 4. L monocytogenes 5. L seeligeri 6. L welshimeri - responsible for listeriosis – lethal food-borne illness - fatality rate of 25% - hibernate when frozen and able to grow at fridge temp. - spreads through the nervous system and can cause meningitis - found in soil, stream water, sewage, plants 28
29 Listeria Monocytogenes
Underwriting Considerations / Risk Assessment Sales turnover Consider number of plants Consider number of production lines What capacity does the plant(s) run at? Product Exposure Diversification on brands Highly diversified Branded Own label Quality Assurance QA in place? Dedicated personnel Formal QA specifications – ISO 22000, HACCP 30
Underwriting Considerations / Risk Assessment Product Packaging Is product tamper evident? If not consider type of business, such as meat production for food service (boxed and bagged) Product Testing Visual – in line to end line X ray, Metal Detection Micro-biological Testing Laboratory (In House or 3 rd Party) Raw / In Coming materials tested Suppliers’ quality standards monitored Audits Audits performed – in house and by 3 rd party food safety auditors Frequency Recommendations 31
Underwriting Considerations / Risk Assessment Plans Recall Plan (no recall plan for food and beverage risks = no cover) Crisis Management Plan (a company that produces branded product should have a CMP) Are plans regularly updated and tested? Batch coding and traceability? History Health warning letter? Health authority press release? Class III recalls (no adverse health consequences) Class II recalls (probable health hazard) Class I recalls (reasonable health hazard) – Every Element Carries a Rate + Underwriting Judgement 32
Food Safety Hazard Analysis Critical Control Point (HACCP) 1959 First works, NASA wanted to produce safe food for astronauts 1963 World Health Organisation issue principles (Codex Alimentarius – 150 country membership) Conduct hazard analysis Determine critical control points (CCP) Establish critical limits Establish a system to monitor control of CCPs Establish corrective action plan to CCP found not to be under control Establish procedures for verification to confirm HACCP is working Establish documentation concerning all procedures and records 33
Product Batch & Traceability Traceability is now a recognised feature within international food safety USA authorities demand that product be traced within 4 hours, but generally completed within 2 hours Batch quantities and values essential to understanding Insured operation(s) Number of facilities, production lines and geographic spread of operations are a guide to how extensive the result of a recall can be Fresh produce batching – beware of the pitfalls of where a contamination might occur (Policy does not cover crop) 34
Crisis Management 35 Incident Occurs Analyse Facts By Mgmt CMT Required? Call CMT Yes Continue to Monitor Situation – if necessary No Incident Finished Quick Review Of CRM/PRP – confirm R&Rs Review HACCP Plan – Review Information on Product and manufacturing process Yes
Accidental Product Contamination M Maple Leaf 2008 – Listeria Monocytogenes found in cooked deli meats Maple Leaf foods announced a massive recall of 243 types of ready to eat meat products supplied to stores, restaurants and cafeterias. Estimated loss CAD 75m (uninsured) 36
Accidental Product Contamination XL Foods Recall 2012 – E.Coli 0157:H7 A number of illnesses recorded in Canada and USA Over 1,500 products being recalled with many products processed for 3 rd parties (Own Brands) Since the beginning of the recall XL Foods has refused to give interviews to the press – lack of crisis awareness and a communication strategy Estimated loss yet to be determined. Largest meat recall of any Canadian food company to date 37
Accidental Product Contamination Peanut Corporation of America Filed Chapter 7 Bankruptcy 2008 – Salmonella Typhimurium in peanut butter & peanut butter paste 714 documented illnesses in 46 states (USA) 9 deaths Peanut products an ingredient in many products processed by 3 rd parties One of the largest recalls in USA history Management of PCA allegedly knew product unsafe, but still shipped Estimated loss yet to be determined. Estimated at USD 1.5bn combined 38
39 Accidental Product Contamination Cadbury Salmonella Recall The 250g Dairy Milk Turkish Dairy Milk Caramel Dairy Milk Mint bars Dairy Milk 8 chunk and the 1kg Dairy Milk bar Dairy Milk Buttons Easter Egg Freddo bar Leaking waste pipe at Cadbury's Marlbrook chocolate crumb plant Leak was sourced in January Authorities informed in June 2006 Estimated loss excess of GBP 55m
Accidental Product Contamination 40 Tomato Recall / Jalapeno Peppers 2008 – Salmonella Saintpaul found in salsa 1,017 cases in 41 states (USA), of which 384 cases in Texas alone Largest USA salmonellosis outbreak since 1985 FDA put pressure on food industry to recall tomatoes, resulting in destruction of that year’s Florida tomato industry Two weeks later identified as jalapeno peppers from Mexico Estimated loss unknown, but USD millions ? or
41 MPT Threat Lucozade owned by GlaxoSmithKline Animal Liberation Front (ALF) – single issue group Threat to contaminate Lucozade with urine 5m bottles in UK recalled No urine found Lucozade Sport – rehabilitated brand Introduction of tamper evident seals Estimated loss of GBP 10m
Accidental Product Contamination 42
43 Is this a dangerous lunch? 1. What is dangerous about this lunch to an asthma sufferer? 2. Is there anything, other than the knife, that poses a health threat?
44 Is this event covered by CPI? In February 1990 the company was forced to recall all 160 million bottles on store shelves around the world after significant amounts of the carcinogen benzene were discovered in its water The dirty filter that caused the problem was replaced but consumers outside France were without the product for about 10 weeks, which is “forever” by marketing standards. The company president called it ''a brutal crisis'' and the disaster gave Evian a foothold in the lucrative US bottled-water market Estimated loss unknown Loss to brand – massive – never recovered market share