Does a CDMO need recall insurance?

Yes, in nearly all sponsor MSAs. Recall coverage is now a routine sponsor MSA insurance requirement, sized at $1 million to $5 million first-party limits. The most common gap on existing CDMO programs is that recall is carried as a sublimit on the products liability policy, capped at $250,000 to $500,000 - well below what a real FDA Class I recall costs to execute.

First-party recall coverage funds the CDMO's own cost of pulling product from market: notification, retrieval, destruction, replacement product manufacture, and lost contract revenue during the recall window. Third-party products liability funds claims paid to injured users or downstream purchasers. Sponsor MSAs typically require both - explicitly named as dedicated lines, not buried as a products sublimit.

Dedicated recall is placed through specialty life-sciences carriers and Lloyd's-backed surplus-lines paper. The submission requires recall history, product class breakdown, sponsor portfolio, and an executable recall plan. Underwriting is materially tighter than the rest of the program; expect 6 to 8 weeks from submission to quote.