The business being acquired was written through Liberty International Underwriters (LIU) U.S., which is exiting the field.
AGCS, which began offering product recall insurance in North America in 2016, said it is committed to further expanding its business in this segment, with a focus on larger corporate clients.
“For Allianz, this opportunity helps further position us as a leading product recall carrier and supports our strategy of expanding our customer base in the U.S.,” said Christof Bentele, global head of the AGCS Crisis Management division, which offers insurance and services related to product recall and contamination, terrorism and political violence and hostile environments.
Bentele said that customers choosing to renew policies with Allianz will retain the same crisis management partners, and benefit from Allianz’s global network in underwriting and claims.
Specialized product recall insurance is designed to help manage the costs of a recall such as testing, consultant and/or advisor expenses, costs for advertising and implementing the recall as well as costs for repairing or replacing products.
According to AGCS’s report Product Recall: Managing The Impact of the New Risk Landscape, the average cost of a significant incident is in excess of $12 million, with the costs of largest events far exceeding this total. Record levels of recall incidents – both in size and cost – are a result of several factors, including tougher regulation and harsher penalties, the rise of large multi-national corporations and complex global supply chains, growing consumer awareness, economic pressures in research and development, and production as well as the growth of social media, according to the report.
Beyond covering financial losses following a recall incident, AGCS also offers its clients crisis management assistance services through its partner company red24, which also supported Liberty Mutual’s clients.