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Food Safety: HACCP can insure the health of your business

March 25, 2003
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Insurers are beginning to work with processors to protect their interests as well as consumer health.

Insurers are beginning to work with processors to protect their interests as well as consumer health.


In 1994, Dr. Michael Blumenthal and I wrote a short paper that explained the potential benefits to processors who took the time to develop and implement HACCP. We described both positive and negative benefits. Negative benefits were described as bad things that could be prevented if a company had a HACCP plan in place.

These included issues such as reduced consumer complaints, reduced potential for illness or injury, and reduced potential for adverse publicity. These negative points were not the best way to “sell” the program to management. Positive benefits were those that could show cost savings, enhanced efficiencies and increased revenues if HACCP was implemented. The positive benefits included becoming a more desirable co-packer or supplier, the opportunity to mandate HACCP for a company’s suppliers, enhanced product quality, reduced waste, improved employee morale and reduced product liability and other insurance.

The liability point was the last positive benefits listed, but was, in my opinion, the most important of all, especially when you look at potential cost savings for the operator. Part of the rationale for reduced liability was drawn from other industries. Good drivers receive discounts on car insurance. Operations that follow established codes related to fire prevention and control receive an insurance break, so it seemed logical to assume that a food processor that had a HACCP plan and its prerequisite programs in place should receive a discount on their liability insurance.

However, this was not happening at that time. But times change and it appears that today there are insurers who realize that food safety is a good investment. If a product is implicated as the source of a foodborne illness or if there is a significant quality problem that results in something being recalled and destroyed, the insurer will end up paying in most cases. The processor may end up paying higher premiums, but it was the insurer who had to pay the big bucks.

Richard F. Stier is a consulting food scientist

Insurers are now beginning to work with food safety professionals to protect their interests, and, ultimately, the interests and health of consumers. It is an insurer’s right to protect their investment, so a systems and plant audit would be one means to evaluate how exposed a food processor really is.

Such an audit would look at the operation’s prerequisite programs, including sanitation standard operating procedures, good manufacturing practices and whether they are being followed, preventive maintenance, worker education, product identification and product traceability.

Such an audit would also include a review of records to verify that things are being done as stated in the company’s operating procedures. It is not at all uncommon to find that what is written in the manuals and what is being done on the production floor or in a warehouse are very different.

Don’t be surprised if you receive a call from your insurer asking for a food safety audit. Following the audit, they may demand that you implement HACCP and other programs if you haven’t already done so.

They may ask that existing systems be upgraded. For the insurers and for you, it is really nothing more than good business. These audits can protect your business, your good name and save you money. If good drivers get a reduction in their automobile insurance, why shouldn’t a processor who operates a safe and sanitary food plant get a reduction in their premiums?

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