Firms should review insurance cover in wake of FSMA, say lawyers

By Elaine Watson

- Last updated on GMT

Related tags Food and drug administration Food

Firms should review insurance cover in wake of FSMA, say lawyers
Food manufacturers should review insurance policies to ensure they have adequate cover in the event of a product recall as new food safety legislation comes into force, lawyers have warned.

While the Food and Drug Administration (FDA) has been given new mandatory product recall powers under the Food Safety Modernization Act (FSMA), this in itself is not expected to prompt many more recalls given the FDA can already force manufacturers’ hands by publishing its warnings to those failing to respond to recall ‘requests’.

However, ​the risk-based approach enshrined in FSMA could in itself drive more recalls by exposing more failures in the food supply chain, predicted legal firm Covington & Burling.

This made it even more important for firms to read the small print of insurance policies, particularly product liability packages, which did not necessarily cover recall costs and might need to be supplemented with specialist product recall policies, said the firm.

Many manufacturers were also worried about whether they would be expected to conduct on-site audits of overseas suppliers under FSMA or whether third-party checks would be acceptable, it added.

User fees to fund FSMA would mean higher food prices in stores

Its comments came as food trade associations urged the appropriations committee at the House of Representatives to reject calls to levy user fees on food producers to fund the implementation of FSMA.

In a letter to the committee co-signed by a raft of trade bodies including the American Bakers Association and the American Meat Institute, the authors pointed out that the administration had only requested targeted funds for the implementation [of FSMA] of $100m for 2012 despite the fact that congressional budget experts predicted it would cost at least $300m a year to implement.

“Given that discrepancy, the administration should have requested more funds for the FDA in its budget submission rather than relying on congressionally rejected user fees to make up the difference."

The ‘food tax’ would just drive up prices, warn the associations: “The creation of a new food tax would mean higher costs for businesses and higher food prices for consumers. We urge Congress to reaffirm its stated opposition to imposing new user fees on food producers and stand ready to work with Congress and the administration to find a better and less burdensome solution.”

Related topics Regulation Food safety

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