This website uses cookies to provide you with the best possible service. By continuing to use this website, you accept the use of cookies. However, you can change your browser’s cookie settings at any time. You can find further information in our updated data privacy statement.


What’s Driving Auto Industry Recalls?

October 28, 2014| By Alexander Eistert | Auto/Motor, General Liability | English

Region: Europe

Automobile recalls are on the increase. It’s almost a pandemic, with reports relating to different makes of vehicle appearing continuously around the world.

After a run of recalls between 2009 and 2011, Toyota announced in April 2014 that 27 models of its flagship brand had safety issues. A total of 6.4 million vehicles had to be recalled, 3.5 million of them suffering problems with their airbags.

Toyota isn’t alone. One of the world’s largest product recalls up until 2014 took place in 2009 and affected 16 million vehicles made by the Ford Motor Co. It was found that a defective cruise control switch posed a fire hazard.

In 2013 the U.S. NHTSA (National Highway Traffic Safety Administration) recorded a total of 632 recall actions for almost 22 million vehicles. It’s a similar picture elsewhere. Last year in Germany there were 180 vehicle recalls (around 612,000 cars), which represents an 11% increase on the previous year.

There are many different reasons for the rise in auto recalls – and they apply to other products as well. The power of social media means that consumers are more informed than ever before. Enhanced consumer protection has also lead to stricter requirements being placed on manufacturers.

Meanwhile, ever more sophisticated production processes and the complexity of products themselves are both contributing to defect rates. In car design especially, electronic assistants are highly susceptible to faults that may result in comprehensive recalls by manufacturers.

Product recall insurance is available to mitigate many of the costs incurred by producers initiating a recall. In Germany, for example, there are widely accepted model terms and conditions for recall insurance. But offering recall policies combined with general liability insurance, instead of in a separate policy, is becoming more common.

Policy terms and conditions are widening, some even going so far as to provide cover for legal liability separately, without regard to bodily injury or damage to property. We see contractual liability more frequently included in policies; other possibilities under discussion include the insurability of dismantling and assembly costs.

Remember, Gen Re can help you with your recall insurance products by providing facultative support. It doesn’t matter whether the risk in question is transferred to us as standalone cover, combined with a product liability insurance or as a carve-out policy. What’s important is achieving a balanced ratio between the risk itself and capacity, attachment and premium on the other side.

For more on current developments in recall insurance read my article published in the September issue of Topics.


Stay Up to Date. Subscribe Today.


Get to know our global experts

View Contributors