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Stricter regulations and increased enforcement of product recalls under Biden administration looks to impact all industries in 2021 and beyond

Sedgwick brand protection releases latest U.S. recall index report, showing recall risks for automotive, consumer product, food, pharmaceutical and medical device industries

MEMPHIS, Tenn., August 19, 2021 – Sedgwick, a leading global provider of technology-enabled risk, benefits and integrated business solutions, published its latest U.S. product recall index report today. According to the Sedgwick recall index report, consumer advocates and U.S. lawmakers are maintaining pressure on regulators to crack down on unsafe products, making it more important than ever for companies to prepare for increased scrutiny and reputational risks that come before, during and after a product recall or in-market remediation.

The new report includes all the latest recall data, trends and predictions companies need as business leaders prepare to emerge from a global pandemic that changed the regulatory landscape, political climate and consumer behavior.

This industry-leading research and analysis was designed and delivered by Sedgwick’s experts in best-practice recall, remediation and retention solutions. Sedgwick works in partnership with clients across all industries to manage the risks and minimize the impacts of in-market business and product crises.

Highlights include second quarter data and predictions for what to expect for the remainder of 2021:

Second quarter recall data:

  • Consumer product recalls returned to quarterly averages observed in 2019 and 2020, reflecting a 34% increase in events and 364% increase in affected units compared to Q1 2021.
  • U.S. Food and Drug Administration (FDA) food recalls increased 20.5% to 106 events, representing a 232.1% increase quarter-over-quarter.
  • United States Department of Agriculture (USDA) recall activity remains low compared to 2019 pre-pandemic quarterly averages but represents the highest number of recalls announced in the last six quarters.
  • Automotive recall events decreased slightly from the last two quarters, affecting 6.7 million units, just half the total units affected in Q1 2021.
  • Medical device recalls decreased for the fourth straight quarter to just 173 events in the second quarter, down 18.4% and resulting in a nine-quarter low.
  • Pharmaceutical recalls dropped for the third consecutive quarter, decreasing 6.3% to 59 events in the second quarter, and marking a new low since the first quarter of 2019.

Looking ahead in 2021:

  • Even as automotive recall activity for the first six months of 2021 trends slightly behind 2020, evidence is mounting that the National Highway Traffic Safety Administration (NHTSA) is taking a more aggressive position on recalls under the Biden administration. Whereas the Department of Transportation previously sought limited regulatory oversight of automotive innovation, the latest regulatory actions suggest that time is over.
  • The U.S. Consumer Product Safety Commission (CPSC) issued its first report on artificial intelligence (AI) and machine learning (ML) in consumer products, promising added scrutiny of “potential hazards” created by household devices using the technology. Given these plans, expect the CPSC to prioritize AI and ML oversight in its fiscal year 2022 operating plan as well, something consumer product manufacturers should watch carefully.
  • The food industry is cracking down on recalls due to heavy metal levels. Companies across the entire food industry should be watching Congress, FDA and World Health Organization (WHO) to understand the potential regulatory compliance challenges and risks.
  • The medical device industry is seeing the challenges of the global coronavirus pandemic begin to wane, and signs point to the industry being in the midst of a rebound. Companies can expect that some of the changes will be here to stay – hopefully in a way that is beneficial to regulators, manufacturers, healthcare professionals and patients.
  • Contamination risks have always been a long-standing risk for pharmaceutical companies, and despite the FDA and the industry’s tireless efforts to protect consumers from potential carcinogen contamination, the risks endure. Companies can expect regulators to continue to work on finding ways to prevent contaminants from entering the drug supply.

“While there appears to be a light at the end of the COVID-19 tunnel and economists predict a business boom for the remainder of the year, we’re certain to see expanding reputational risks to companies across all sectors,” notes Chris Harvey, senior vice president at Sedgwick. “Companies across all industries should be re-evaluating their manufacturing processes, vetting supply chain partners and investing time and resources to prepare recall management, crisis and communications plans.”

The recall index is produced by Sedgwick’s brand protection experts every quarter. It is the only report that aggregates, and tracks recall data to help industry stakeholders navigate the regulatory environment, product recalls and other in-market product challenges. For more information, please visit www.sedgwick.com/brandprotection.

To download the recall index report visit U.S. product recall index report.

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