The Cost of Product Recall Isn’t Just Rising – it’s Rocketing

This piece is by Pete Gillett, Founder, Marketpoint Recall

For insurers, it’s become the financial equivalent of stepping on a rake: predictable, painful, and increasingly hard to avoid. When brands scramble to fix a faulty batch of goods, it’s often the underwriters who are left nursing the bruises. Between crisis PR, logistics, compensation, and regulatory fallout, the bills stack up faster than you can say “voluntary withdrawal.” And while the scale of some recalls makes headlines, it’s the frequency and fragmentation of the smaller ones that chip away most consistently at insurer margins.

In an age where trust evaporates at the speed of a tweet, and consumers expect instant resolution, insurers are absorbing the hidden costs of unprepared brands. But here’s the uncomfortable truth: most of these costs are avoidable. Not by preventing every product fault (we’re not magicians), but by being better prepared for when things do go wrong.

A costly business: the 2025 recall landscape

So far in 2025, the UK has seen a spike in consumer product recalls. According to the Office for Product Safety and Standards (OPSS), over 380 recalls have already been issued in Q1 alone – a 22% increase from the same period in 2024.

Notable among them was the recall of a major high-street kitchen appliance brand, which saw over 80,000 units withdrawn due to an overheating risk. This after the high-profile recall of a popular children’s multivitamin range, yanked from shelves after inconsistent dosage levels were detected. In both cases, the damage wasn’t just reputational. Between product replacement, customer refunds, logistics, legal exposure, and crisis communication, estimated costs spiralled literally into the tens of millions.

For insurers underwriting these liabilities, the economics is unsettling. We know from experience that the average cost of a product recall claim in the UK now ranges between £2.5m and £5m, but larger cases can easily exceed £10m. Add in class actions or cross-border implications, and it becomes clear: this isn’t a niche risk. It’s a structural threat.

Why do recalls hit so hard?

It isn’t simply the product fault that creates the crisis. It’s how unprepared brands often are to deal with it. Too many still treat recalls like fire drills – theoretical until the smoke fills the room. They fumble with outdated customer data, scattergun communication, and patchy co-ordination across departments. Speed, which should be their ally, becomes their Achilles’ heel.

Insurers, on the other hand, aren’t always helping themselves either. Some continue to write recall cover with broad strokes, underestimating the true cost of poor planning. Others neglect to probe a brand’s readiness until after the claim lands. There’s often a lack of incentives or requirements for brands to invest in proper recall preparation upfront.

But here’s the thing: if recalls are inevitable, then the answer lies in planning and preparation. The answer lies in being ‘recall ready’.

What it means to be recall ready

Being “recall ready” isn’t just a nice-to-have PR line. It’s a proven cost-saving strategy. Brands that invest in structured, strategic recall planning can reduce their recall-related costs by up to 50% compared to those caught flat-footed. That’s not optimism; that’s operational maths.

So what does being recall ready actually involve?

1. Live access to distribution data: Brands should have immediate, accurate visibility of where affected products are, both in-store and in customers’ hands.
2. Pre-approved crisis plans: A well-rehearsed recall protocol that integrates legal, comms, logistics, and customer service is essential. It’s not enough to have a dusty PDF on a server.
3. Consumer engagement tools: Direct communication channels that can be activated instantly (think SMS, email, app push) to inform affected customers and guide them through next steps.
4. Scenario testing: Regularly stress-testing the recall process ensures that when the real thing happens, it’s not the first time the team has walked through it.
5. Regulatory readiness: Knowing the latest obligations under UK law and having documents pre-prepared for submission speeds up the compliance element.
6. Insurer-brand collaboration: Crucially, insurers should be part of this process. Brands should know exactly what their policy requires, and insurers should know the brand’s plan isn’t just theoretical.

We call this being “Recall Ready” – something we help brands achieve every day.

Cutting the cost, together

Recalls are part of the modern consumer economy. We can’t eliminate them, but we can certainly stop pretending they have to cost what they do. Prepared brands move faster, communicate better, and make fewer costly mistakes. Prepared insurers face fewer surprises, and fewer seven-figure claims.

It’s time insurers stopped absorbing the cost of brand unpreparedness. By making recall readiness a condition of coverage, or at the very least, a strong recommendation, they can turn a reactive expense into a proactive safeguard. Because, in the end, the cheapest recall is the one handled well…

Pete Gillett is the founder of Marketpoint Recall, the creators of Recall Ready – a cloud-based system that helps brands prepare for, manage, and recover from product recalls with confidence.