KeHE Distributors Announces Higher Liability Insurance Limits for Nutritional Products
(Pasadena CA June 17, 2015) Major Midwest distributor KeHe Distributors is vigorously enforcing higher liability insurance requirements for their nutritional products suppliers, reports Greg Doherty, EVP and Managing Director Dietary Supplement Practice Group at Bolton & Company Insurance Brokers. Doherty says KeHE’s actions to raise insurance requirements follow similar steps taken by Whole Foods Market, Walgreens, UNFI and NBTY in recent years.
KeHE’s minimum liability requirement is $5,000,000 per occurrence and aggregate, along with the usual and customary “additional insured” status for KeHE. Interestingly, this requirement only applies to companies supplying KeHE with “vitamins, minerals, herbs and nutritional supplements.” All other products supplied to KeHE only need to provide $2,000,000 of coverage. This too is similar to the “‘tiered requirements” used by others such as Whole Foods. Dietary supplements are invariably in the top tier which requires the highest level of insurance, meaning that there is a perception that supplements and other nutritional products are more risky than food and other sundries.
“These changes will adversely impact suppliers’ insurance costs due to additional premiums,” Doherty says, adding that “KeHE representatives have made it very clear to me that there will be absolutely no exceptions to this $5,000,000 requirement.”
Most of the pain of the increased premiums will probably be felt by suppliers to Nature’s Best, which KeHE acquired last year. Adds Doherty, “For as long as I can remember, Nature’s Best only required $2,000,00 of insurance from all suppliers, with no tiered system. As KeHE goes through the process of examining the Nature’s Best suppliers they inherited, they will be telling the nutritional products suppliers to raise their limits to satisfy the KeHE requirement.”
According to Doherty, complicating things a bit more is the fact that some of the dietary supplement insurance providers cannot offer more than a $2,000,000 limit to their policyholders. This means they will have to seek an “excess” policy for the additional $3,000,00 from another carrier. “Excess markets certainly exist, and the task itself can easily be done, but not without a disturbing cost increase for the suppliers.”