The requirements for liability coverage on the products sold by Whole Foods Markets have been raised. What does this recent increase in product liability insurance requirements mean for supplement suppliers insurance costs?
Whole Foods Markets (WFM) has recently begun enforcing higher product liability insurance requirements, which will adversely affect dietary supplement suppliers insurance costs, according to Greg Doherty, Dietary Supplement Practice Leader at Poms & Associates Insurance Brokers, Inc.
“For the past several years the product liability insurance requirements for WFM have been unevenly enforced, often on a regional or even local basis, with exceptions made that deviated from corporate guidelines. Virtually without exception, the deviations allowed suppliers to get by with insurance limits less than the corporate mandate. Now WFM has decided to enforce the product liability requirements with a ‘no exceptions’ policy” says Doherty, who spoke with WFM’s insurance broker who has responsibility for the new enforcement.
Interestingly, WFM has categorized dietary supplement companies in its highest of four risk categories, and the product liability insurance requirements are $6 million per occurrence and $7 million aggregate.
Doherty further adds, “For companies selling or wanting to sell supplements in WFM, and which currently don’t meet this requirement, this enforcement action will cost companies a lot of money in higher premiums, and in some cases, may be the tipping point between selling and not selling to WFM.”
As for a solution to assist companies with these new insurance limits, Poms & Associates has developed an insurance facility that will take companies up to the required $6 million per occurrence/$7 million aggregate—no more and no less. This insurer understands that the insurance is being purchased not because of a perceived increased in the risk, but merely to satisfy WFM, which will keep the premium cost down.
Doherty concludes, “Most of the big box drug chains, plus GNC and Vitamin Shoppe, have an insurance requirement of $5 million. Last year Walgreens raised the bar to $20 million for their dietary supplement suppliers, and many of their suppliers are still struggling with that, as far as I can tell. There is speculation that the other large drug and box store chains will follow Walgreens and WFM and raise their requirements, and only the future will tell us if that happens.”
When it comes to an in-depth understanding of the dietary supplement industry, Greg Doherty is Poms & Associates’ mega-multi vitamin of knowledge, experience and reliability.
Just like the radio commercial says, “When banks compete you win.” we say “When insurance companies compete for your business, you win.” If you’re in the supplement industry, and want to be sure that your company has the best possible product liability insurance, and experience the personal service you deserve, call Greg directly at 818-449-9317
For additional information on product liability insurance requirements, please contact: Greg Doherty 818. 449.9317 Gdoherty@pomsassoc.com
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