Healthy horsemeat saves insurers' bacon

Healthy horsemeat saves insurers' bacon

The horse meat scandal in Europe could lead to insured firms taking their commercial insurers to court, but it is unlikely claims will be paid, an industry specialist has said.

Most food suppliers’ product recall or product liability coverage is only triggered if the food is harmful to consumers, however, horse meat is generally healthier than beef with higher protein, omega three and iron.

When food inspectors first announced horsemeat was found in beef burgers in Ireland, no one expected the problem to escalate across food products sold as beef in the UK, France, Norway, Austria, Switzerland, Sweden and Germany.

Eric Smith, head of recall for food and non-food at Red 24, a crisis management firm, says: “To date no insurers have paid out,” despite the fact he says the problem has likely existed for a long time.

“This could be changed tomorrow. If a horse was slaughtered right after being given drugs for an injury or fever, or they were given a very high dosage this could potentially go into the food. You would have to eat a serious amount of horse meat for this to cause a problem though,” he adds.

While mainstream press have discussed food “contamination”, Smith explains that actually it is food “arbitration”.

A supermarket or meat supplier would be covered if traces of horsemeat are found in beef if they had a quality insurance policy.
“The premiums would be massive. The insurer would be paying out every five weeks. I would tell insurers not to touch that kind of coverage with a barge pole,” says Smith.

UK food merchandisers and manufacturers can be fined £20,000 per offence if the food is not the quality, substance and nature demanded by the purchaser. Supermarkets could still potentially be prosecuted and ignorance is no defence.

“Companies have been very lucky not to be prosecuted so far. The authorities have been lenient,” says Smith.

“The scandal will change policy and make DNA tests mandatory. They cost about £280-£400 ($435-$620) per test and the consumer will end up paying for it.”

The biggest fear for the food industry is religious people discovering they have been sold and inadvertently eaten a forbidden meat, suggests Smith.

Sometimes the food product can go through as many as ten different handlers before going to the final manufacturer and is sold at a low price in supermarkets, with each handler wanting a cut of the costs.

“It’s a ludicrous situation where you can’t track if it’s been adulterated,” says Smith, explaining that as a result it cannot be covered within most supply chain policies.

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