In early 2025, product recalls surged by 25%, even as the number of recall events dropped. What’s behind this paradox? From shifting regulatory pressure to quality control cutbacks, this article explores the key trends reshaping product recall risk and offers insight into how brokers can help clients stay protected.
A striking trend emerged early in 2025: although the number of product recall events declined, the total number of units recalled spiked by 25% in the first quarter. This signals a fundamental shift in how recall risk is manifesting, and it should raise a red flag for businesses and brokers alike.
SO, WHAT IS DRIVING THIS GROWING SEVERITY?
Multiple factors are at play, creating a perfect storm for product safety failures. Economic pressures like tariffs and thinning margins have led many companies to cut costs, often at the expense of quality control. Fewer in-house tests, less batch sampling, and cheaper suppliers with inconsistent standards can result in a single recall impacting far more units than before.
When companies quickly pivot to find alternative suppliers, they can end up with substandard components – inconsistent quality, different chemicals, or unknown processes, and that is where additional risk creeps in.1 Add in declining regulatory oversight, and product flaws may go undetected for longer periods, magnifying the ultimate impact when they are finally uncovered. Proposed budget decreases at the US Food and Drug Administration (FDA) and the removal of commissioners from the Consumer Product Safety Commission (CPSC) have signaled a softer regulatory touch, at least for now. And when enforcement is lighter, the risk is greater. That makes selfpolicing and insurance coverage more critical than ever. Inconsistent inspections and less state-level oversight are fertile ground for mistakes or neglect.1
Some companies may also be tempted to cut corners on recalls, offering repairs instead of replacements, or delaying action entirely. However, with tariffs and supply chain issues, companies can encounter prolonged delays when sourcing adequate replacement parts. Patchy product recall responses can be devastating for businesses, and cutting corners could raise the risk of litigation.1 In addition, many US companies also export products to Europe, which has recently tightened product safety regulations.
These factors challenge brokers to help clients reassess their risk. Coverage limits that once seemed sufficient may now fall short. There’s no universal formula for product recall insurance — it must be tailored to each client’s product complexity, production scope, and industry. For example, a $10M ingredient manufacturer whose product is embedded into a $500M food chain faces far more exposure than a bakery selling $10M in cookies.
RECALL INFO BY INDUSTRY CATEGORY
No industry is immune to recalls, from food and pharmaceuticals to consumer products and medical devices. Each year brings new regulatory shifts and product safety challenges. The snapshot below highlights key recall trends across major sectors, offering insight into where risks are emerging and how they’re evolving.
FOOD + DRINK
The food and beverage industry is entering a period of heightened regulatory scrutiny under the Trump Administration’s Make America Healthy Again initiative. From banning FD&C Red No. 3 to proposed reforms targeting artificial additives and GRAS loopholes, manufacturers are bracing for significant shifts. HHS Secretary Robert F. Kennedy Jr. has championed the removal of dyes and additives, proposed mandatory FDA review of all new food ingredients, and introduced updates to allergen guidance and the definition of “healthy” food claims. Meanwhile, ongoing tariff volatility continues to challenge planning and pricing, especially for import-heavy categories like produce.3
Despite a slight 3.8% decrease in FDA food recall events in Q1 2025, the number of units affected soared 232%, topping 70 million units — the highest in nearly two years. Undeclared allergens led all recall causes, followed by bacterial contamination and foreign material intrusion. Supplements, prepared foods, and baked goods were the top categories by volume. With policy shifts, labeling changes, and ingredient crackdowns underway, food and drink companies face an increasingly complex and high-stakes regulatory environment.2
AUTOMOTIVE
The automotive industry is facing mounting pressure due to shifting trade policies, regulatory rollbacks, and evolving recall mandates. Tariffs on imported metals, vehicles, and parts, alongside retaliatory duties from other nations, created planning and pricing challenges for U.S. automakers and dealers. At the same time, regulatory changes, including the rollback of zeroemission vehicle targets and the vacating of the FTC’s CARS Rule (Combating Auto Retail Scams), signal a new direction in industry oversight. Meanwhile, a new Department of Commerce rule now bans certain vehicle connectivity systems and software from China and Russia, raising significant compliance concerns.2
Despite these headwinds, the number of U.S. automotive recalls dropped significantly. The National Highway Traffic Safety Administration (NHTSA) recorded 215 recalls in Q1 2025, down 13.3% from the previous quarter and nearly 18% year-over-year, marking the second-lowest total in five years. Affected units also plunged by nearly 50%, reaching a 12-year low. Electrical systems remained the leading cause by both event count and volume, followed by equipment and powertrain issues.2
CONSUMER PRODUCTS
Consumer product manufacturers are grappling with rising tariffs and retaliatory trade actions that disrupt pricing, supply chains, and long-term planning. Although some tariffs were paused by mid-April, uncertainty remains high. Meanwhile, domestic trade tensions intensified, with U.S. industries calling for additional duties to protect manufacturers. While federal oversight of AI technology is expected to take a lighter-touch approach under the new administration, the Consumer Product Safety Commission (CPSC) remains focused on product safety, particularly for children and in online marketplaces. An absence of federal regulation may lead to a patchwork of state laws to try to protect consumers and market competition, resulting in a fragmented regulatory environment. Companies using or developing AI technologies should monitor both federal and state policy developments closely and remain agile as the rules evolve.
Product recalls surged to 101 events in Q1 2025, marking the highest quarterly total since 2011 - a 90.6% increase from Q4 2024. Yet the number of recalled units fell by 43.7%, with fewer large-scale events. Sports and recreation products led by recall count, while a massive cooler recall drove Yard and Garden to the top by volume. Hazard trends included high instances of burns, falls, and fire risks. Notably, Q1 also saw over $28 million in CPSC fines, already surpassing last year’s total, highlighting a renewed emphasis on enforcement amid shifting regulatory requirements.2
MEDICAL DEVICES
The medical device sector saw a slight reprieve in Q1 2025, as total recall events dropped by 8.9%, falling from 259 to 236. The number of units affected declined even more dramatically, down 42.1% to 18.58 million units, marking the lowest volume in three years. However, not all trends were positive: Class I recalls, which involve the highest risk of injury or death, increased to 31 events, the second-highest quarterly total in two decades.2
Device failure led all recall causes by event count, while safety concerns drove the largest volume of affected units. Software defects and mislabeling also remained significant drivers of recalls. As regulatory scrutiny continues and manufacturers balance innovation with compliance, the industry must remain vigilant, especially as high-risk recalls show signs of increasing despite an overall slowdown in recall volume.2
HOW RETAIL AGENTS CAN HELP
Industries like food and pharmaceuticals remain highly susceptible to recalls due to their regulatory oversight, but other sectors, including automotive and children’s products, demand equal attention. With policy wording evolving to encompass more than just recalls, including contamination, infestation, and even quality defects, retail agents and brokers must stay current on endorsements that offer broader protection.
Brokers should also watch for red flags during onboarding: Does the client have a recall plan? Accurate testing records? Crisis management protocols? For those sourcing globally, does their policy provide cross-border support, including import violation or border rejection coverage?
BOTTOM LINE
As recall severity grows and regulatory landscapes shift, businesses face greater exposure than ever before. A single event can impact millions of units, disrupt supply chains, trigger litigation, and erode brand trust. In today’s environment, product recall insurance isn’t optional — it’s essential.
Retail agents and specialized wholesale brokers play a crucial role in helping clients navigate evolving risks, identify coverage gaps, and build recall resilience into their insurance programs. CRC Specialty Producers are here to help you deliver tailored solutions that protect your clients’ products, people, and reputations. Reach out to your CRC Specialty Producer today to explore how we can help safeguard your clients against the rising tide of recall risk.
CONTRIBUTORS
- Jonathan O’Malley is a Broker with CRC Group’s Minneapolis office, where he specializes in Product Recall exposures.
- Chris Martin is a Casualty Broker and the President of CRC Group’s Minneapolis office.
END NOTES
- Product recalls may spike amid tariffs and lighter oversight, Insurance Business America, May 27, 2025. https://www.insurancebusinessmag.com/us/news/breaking-news/product-recalls-may-spike-amid-tariffs-and-lighter-oversight-537067.aspx?utm_campaign=Editorial-IBA-NS&utm_content=333948002&utm_medium=social&utm_source=linkedin&hss_channel=lcp-13684888
- Recall Index Q1 2025, Sedgwick, May 15, 2025. https://marketing.sedgwick.com/acton/attachment/4952/f-087ca7cb-3c9c-4a8d-84d8-7b325a97a3b3/1/-/-/-/-/Sedgwick%20Recall%20-%20US%20Recall%20Index%20Report%20-%202025%20Edition%201.pdf?utm_medium=landing+page&utm_source=Act-On+Software&utm_content=landing+page&utm_term=Sedgwick%20Recall%20-%20US%20Recall%20Index%20Report%20-%202025%20Edition%201.pdf&cm_mmc=Act-On%20Software-_-Landing%2520Page-_--_-Sedgwick%20Recall%20-%20US%20Recall%20Index%20Report%20-%202025%20Edition%201.pdf&sid=TV2:6uhBYSjOo