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Securing India's Domestic Consumable Supply Chain: An Insurance Perspective

Sustaining and ensuring the good spirits of the second most populous nation in the world is no mean feat. It is not surprising that India is home to the 6th largest food and beverage industry in the world, supported by a technologically competent processing sector. With a steady stream of foreign direct investment, today, our export footprint has expanded all over the globe.

In tandem, India’s beauty and personal care market have also experienced phenomenal growth. Buoyed by favourable economic policies and fiscal incentives, India’s domestic consumable ecosystem offers remarkable opportunities for business success.

However, the Maggie episode of 2015, and the ongoing COVID-19 crisis is a grim reminder that in a highly customer-centric world of increasing socio-economic, political and environmental complexities, food and personal care organisations are exposed to a wide variety of risks, compounded by the pervasive presence of the social media. Such risks range from contamination of products, malicious product tampering to product extortion with far-reaching implications for the organisation and its brand value. Mitigation efforts may involve significant cost overheads in recalling and replacing the damaged units and in rebuilding consumer and investor confidence.

The economic momentum of the vertical and the spectrum of eventualities involved obliged the Indian general insurers to innovate and design safeguards to shield businesses against such pitfalls. The resultant product contamination insurance present Indian companies with a comprehensive crisis management package. With a tri-layered approach addressing accidental contamination, malicious tampering and product extortion, they are capable of defending insured interest through a multipronged strategy. They cover a series of costs including business discontinuity, rehabilitation, consultancy and inbound logistics and other foreseeable losses like adverse publicity and pressure on customer margins.

Primarily, the insurance solution covers financial losses arising from the defiling of products. It includes accidental or unintentional contamination, degradation or mislabelling of products during the manufacturing and distribution cycle and, upon consumption, directly results in adverse effects on the end-users. The insurance products are exhaustive in terms of applicability, encompassing all categories of food and beverage companies, restaurants, nutraceuticals, food supplements, pet food, toiletries and pharmaceutical manufacturers. They can mitigate even extreme cases of severe physiological disorders and loss of life.

Additionally, to provide ironclad protection to customer interests, contaminated product insurance also factors in the chances of hostile intent arising out of business and socio-political rivalries, threatening the integrity of the supply chain. They cover against wrongful and malicious tampering of goods carried out with the end objective of hurting the insured’s brand image and market standing or with extortionary motives to secure unlawful financial gains.

To further enrich the user experience, these insurance solutions are backed by an entire damage control framework, with advisory networks manned by crisis management professionals who can guide the businesses through the troubled times, minimising the potential impact by employing time tested solutions.

With inflating offshore demands and a burgeoning domestic market for ingestible goods, the security and operational sanctity of the sector is essential not only from an economic standpoint but also for ensuring public health and access to quality consumables. Today, when a media is postured to champion consumer rights and global regulators are incessantly raising the safety standards, the business case is stronger than ever for Indian general insurers to drive the contaminated product insurance penetration in the country through ingenuity and service innovation.