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.

Carriers writing dedicated recall include AIG, Berkshire Hathaway Specialty, Chubb, and several Lloyd's syndicates. 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.