The UK will be the first market to see the launch of a new UK Automotive Component Parts Product Recall cover, helping mitigate the risk of expenses linked to a recall.
Recall costs, repair and replacement expenses and legal defence costs can be covered by the new solution offered by Allianz Global Corporate & Speciality SE (AGCS). Crisis management assistance services are also being offered as part of the cover, from partner company WorldAware.
The recall cover will roll out to markets in North America and Asia in due course.
Earlier this year, a poorly connected fastener led to the recall of 160,000 Ram 1500 trucks by Fiat Chrysler.
According to AGCS, the cover addresses how the automotive market has evolved from the manufacturing of individual mechanical parts to the integration of electrical systems, software and new technologically advanced components that interact with one another. AGCS said that ever more complex and integrated components parts and last-minute production has boosted the possibility of defects and ultimately recalls.
The firms said the solution includes impaired property as well as endorsements covering cyber-attacks and line stoppages, activated by a single, comprehensive insured event - a product recall.
Recalls within the automotive industry are increasing in volume and severity. According to an Allianz report, the average value of large recall claims in the automotive industry is €12.4 million.
“The automotive industry is undergoing extraordinary change and a rapid transition to new technology,” said Christof Bentele, Head of Global Crisis Management at AGCS. “Alongside this, closer government regulatory scrutiny as well as increasingly complex global supply chains and growing consumer awareness will only contribute to bigger and more damaging automotive recalls in the future. In this rapidly changing environment it is critical that automotive component manufacturer’s recall insurance policies are ‘fit for purpose’ and tailored to cater for the future risk landscape.”
Stewart Eaton, Head of Product Recall at AGCS UK, added: “Current recall insurance products for automotive component manufacturers are often unclear and fail to address the new and emerging issues faced by today’s modern automotive industry. Allianz has been active in automotive recall insurance for over four decades and we have accumulated invaluable experience and data to navigate the many changes to the industry over that time. We’ve now developed a new automotive recall product to offer a clear and simple solution to the emerging risks faced by an industry undergoing radical change. I’m looking forward to sharing it with our clients and partner brokers.”
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