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Abstract

This paper explores the food safety implications of insurance products that compensate for business losses when food contamination causes a processing firm to initiate a recall. Discoveries of meat and poultry product contamination, in particular life-threatening pathogens, are increasing. The financial losses that follow a recall can be substantial as illustrated by several recent U.S. cases - Hudson Foods, Bill Mar, and Thorn Apple Valley Inc. Additionally, contaminated food product that escapes the current recall system poses a threat to consumer safety. The conceptual analysis presented here suggests that insurance underwriters could motivate earlier recalls and more diligent implementation of Hazard Analysis and Critical Control Point (HACCP). With sound underwriting, these changes could ultimately reduce the incidence of illness and death from foodborne pathogens.

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