Manufacturers Face Greater Recall Risk as Affected Units Hit 3-Year High

The latest Sedgwick Product Safety and Recall Index reveals a critical development in product risk exposure: the frequency of recalls declined in Q3 2025, but the scale of those events escalated significantly, with affected units increasing by over 200% quarter-over-quarter. This decoupling of recall frequency from impact volume marks a new era of exposure for manufacturers and insurers, where fewer events now carry exponentially higher stakes.

For insurance claims professionals, this trend highlights the growing complexity of product liability and the increasing importance of tracking systemic risks across industries including pharmaceuticals, medical devices, food and beverage, and automotive. A single failure now has the potential to trigger widespread financial, reputational, and legal fallout, driving a need for integrated recall management systems, real-time supply chain visibility, and robust incident response protocols.

The Sedgwick report also points to expanding regulatory oversight, with agencies like the FDA, CPSC, and NHTSA intensifying scrutiny—particularly around cybersecurity vulnerabilities and AI-enabled technologies. As regulatory definitions evolve, especially around connected and adaptive products, claims adjusters must prepare for new causation questions and coverage implications.

Additionally, the intersection of trade policies, such as tariffs and import restrictions, with recall exposure suggests broader supply chain instability. Claims handlers should anticipate an uptick in cross-border liability issues and examine how policy wording addresses jurisdictional complexities.

Recall insurance is becoming more than a financial tool—it’s now a signal of operational maturity. Major retailers are beginning to require it, and policies increasingly include embedded services like crisis communications and regulatory liaison support. For adjusters, understanding the structure of these policies and their embedded services is crucial for efficient claims resolution when large-scale recalls occur.