Product recalls in the US dropped significantly by volume in the second quarter of 2025, but the number of recall events rose to their highest level in more than a year, according to Sedgwick's latest US Product Safety and Recall Index.
The findings suggest shifting risk patterns for insurers, with frequency becoming a more prominent driver of exposure in recall and product liability coverage.
The report showed that 85.87 million units were recalled in Q2, down 31.5% from 125.37 million in the first quarter. However, recall events totaled 861, markin an increase in activity despite lower overall volume. Sedgwick noted that the trend may be linked to earlier defect detection, smaller production batches and improved recall readiness, which are factors that can reduce severity per event but increase overall claims activity.
In the first half of 2025, recalls totaled 1,636, slightly down from 1,697 in the same period of 2024. Units affected fell to 211.25 million, compared to 384.17 million a year earlier, the lowest half-year figure in a decade. For insurers, this reflects reduced exposure to large-volume losses but continued pressure from the rising frequency of incidents.
The regulatory landscape is also evolving. Federal agencies have adopted pilot programs and AI tools to streamline oversight, while the Trump Administration has eased some regulations and introduced new requirements in areas such as food safety and chemical reviews. This mix of deregulation and tightening oversight in specific sectors creates a shifting environment for underwriters assessing recall and liability risks.
For carriers, the combination of higher recall frequency and regulatory complexity may prompt adjustments in pricing and coverage terms. Underwriters could place greater emphasis on supply chain resilience, traceability, and client recall readiness when evaluating risks. Some insurers may revisit policy limits and sublimits to account for more frequent but lower-severity claims, while others may consider tightening exclusions or raising premiums in high-risk sectors such as food, pharmaceuticals, and consumer products.
Brokers are expected to play a central role in helping policyholders demonstrate preparedness, from crisis communication planning to supply chain audits. With event-driven exposures rising, insureds may also seek broader coverage for recall-related expenses, including brand rehabilitation and third-party liability.
Chris Harvey (pictured above), senior vice president of Brand Protection at Sedgwick, said businesses will need to reassess supply chains and compliance programs to align with regulatory shifts. For insurers, the findings underscore the importance of ensuring recall and crisis response coverage reflects the realities of more frequent events and evolving oversight, Harvey said.
