U.K. liability insurers sense opening in chocolate recall.

U-.K. product liability insurers are hoping that the recall of more than a million chocolate bars by candy manufacturer Cadbury will sweeten a market that, in their view, has never fulfilled its potential.

Published estimates of the cost of the recall and subsequent lost sales have ranged from 5 million [pounds sterling] (about $9.1 million) to 25 million [pounds sterling] (about $45.8 million).

Matthew Hogg, an underwriter at Lloyd's underwriter Kiln plc, said that a typical product liability incident could be caused by the use of incorrect ingredients. Kiln has a small book of business in this market, Hogg said. Kiln puts together "bespoke," or tailored, policies for its customers, he added.

Kiln's policies, for instance, will cover the business interruption that may be caused by a product recall, Hogg said. "It can be future income streams," he noted in a telephone interview.

A Kiln policy would look at reputational risk and would focus on such intangible assets as intellectual property, Hogg said. Claims could involve such potential liabilities as directors and officers or errors and omissions, Hogg said.

The main trigger for Kiln's policy is likely to be adverse media coverage, Hogg said. "We would hone in to specific concerns that the client might have," he said.

Founded in the 1800s, Cadbury has long been a part of England's history with ties to the British monarchy. The chocolate recall episode could be very damaging for Cadbury, which produces the best-selling chocolate in the United Kingdom. Any loss of public confidence, particularly among parents, could hit Cadbury very hard.

There is some concern at published reports that Cadbury knew of the contamination as far back as January but did not notify the authorities until June. The issue came to light only after reports of salmonella cases that were traced back to Cadbury's products.