Liability insurance proposed for food industries

The Food and Drug Administration will promote a food-safety liability insurance program in high-risk industries, such as those involving dairy and meat products, to help improve supervision, an official said.

According to a draft amendment to the Food Safety Law reviewed last week by the top legislature, the country will encourage the establishment of such an insurance program and urge more food production enterprises to take part in liability insurance plans.

Xu Jinghe, director of legal affairs for the China Food and Drug Administration, said at a seminar on the new food-safety law on Wednesday that authorities will promote compulsory liability insurance among food production companies in some areas.

"Liability insurance could increase supervision from insurance companies over food companies," he said.

According to the draft amendment, a regulation on the liability insurance program will be jointly formulated by the food and drug authority and the insurance regulatory authority under the State Council.

Xu said the move is in line with international trends on food regulation, adding that authorities are also considering suggestions from some legislators on enacting the insurance plan based on different food industry categories.

However, Xu said there are rifts between the authorities and insurance companies on which categories the insurance should cover first.

"We believe that the insurance should first cover high-risk food categories, while the insurance companies believe we should start with low-risk ones," he said.

Chen Xu, deputy director of legal affairs for the CFDA, said the draft amendment to the food safety law did not make the food safety liability insurance program compulsory because legislators took costs into consideration.

"A compulsory program would increase the cost to food companies, and ultimately the cost would be transferred to consumers," he said.

Gao Qinwei, a law professor at Central University of Finance and Economics in Beijing, also said he believed that widespread promotion of liability insurance among food enterprises is not realistic.

"Food enterprises differ drastically in their production volumes and finance capacities. Making the insurance compulsory would greatly increase the costs for small companies," he said.

Gao said the food and drug authority should take the food category and the scale of food enterprises into consideration in the legislation.

The draft amendment, which passed its first reading at a bimonthly session of the National People's Congress Standing Committee last week, was first introduced in June 2009.

It called for tougher regulations for baby formula producers and required online trading platforms to register information about food sellers, including their names and addresses.