News & Insights

Why reputational insurance is so important for food producers

Published 07 February 2019

Reputational insurance cover is more important than ever for food producers thanks to regulatory and customer changes, as your reputation is what makes people buy your products, a Gallagher specialist says.

Stephen Elms, National Head – Food Production at Gallagher, says that stand-alone reputational insurance cover is important for food producers as they face a number of challenges on different fronts.

“Whether it is customer complaints on social media, responding to something like the strawberry crisis or an environmental or data breach issue, food producers should look to use reputational insurance to help re-build their brands if something should go wrong.” 

Stephen Elms, National Head – Food Production at Gallagher

“The industry is well aware of the impact a negative reputational event can have on a brand following the Nanna’s/hepatitis recall of several years ago.”

In 2015 Nanna’s Berries, a Patties Food brand, saw its reputation tumble following a product recall which linked berries to an outbreak of hepatitis A in New South Wales and Victoria.

Following the recall, Patties Foods revealed that the event cost the business an approximate $14.6m reduction in profits. While the majority of costs were linked to the recall and disposal of berries, highlighting the importance of product recall insurance, Patties Food spent close to $25, 000 on social media coverage in the aftermath of the event to try and stem the negative press circulating around the group at the time.


Reputation rated of high concern by the industry

In the Allianz Risk Barometer, an annual study on the biggest risks facing business sectors, food producers named loss of reputation or brand value as the second biggest risk facing their industry.

Reputational insurance can provide cover for a variety of threats, such as:

  • Negative mainstream or social media coverage
  • Poor risk management or food safety practices
  • Environmental concerns
  • Data and security breaches
  • Associations with external third parties that bring your brand into disrepute

It is inevitable that a loss of sales and profit will occur after an event or adverse media report as has been seen for companies as wide ranging as Malaysian Airlines, Target and Volkswagen.

Reputational insurance protection 

Reputational insurance provides benefits to assist companies that lose business or share value in the event of a reputational event. It can also be used to engage a team of specialist crisis managers to help guide your business through the aftermath of an event to limit the damage to your brand or business.

From a regulatory perspective, the Food Standards Act adds pressure from a reputation perspective. Any issue with food needs to be notified in the public domain which can bring a negative impact on a brand.

“A good brand is so important as competition within the industry continues to rise,” Elms said. “For food producers, reputational insurance can help protect them and provide stability in the face of a crisis.

Talk to our experienced food production insurance experts

Specialised industry knowledge means a food production insurance expert can identify the potential risks presented by the processes involved as well as the roll-on effects, such as the need for product recall, and collateral damage, to reputation, for example, and formulate a risk management and insurance cover program accordingly.


Our team of food production specialists calls on the Gallagher legacy of 75+ years in servicing food production enterprises, which means that whether you are a primary producer, in processing, transit or grocery wholesaling, we have deep understanding of the risks associated with each step of the supply chain and how to manage and mitigate them. 


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Further reading

Food production insurance and risk management expertise

Insurance market update: food production challenges from farm to table

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.

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