As with many developing niche insurance markets, the product recall market currently faces a potential crisis of confidence.
Losses are building, new regulations and political issues are impacting insureds, and pricing competition and wording creep are making the sector less attractive to insurers. There is a spate of client litigation cases linked to nonpayment of claims due to misinterpretation of policy wording, and other incidents linked to lack of clarity over claims triggers are seeing clients and prospects question the value of cover. Many brokers are concerned that client dissatisfaction with wording is making the sector more risky, and they are less keen to invest in expertise and grow their product recall teams.
So how do we learn from the mistakes of the past and avoid a potential market dislocation in the future?
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