They Could Have Used A Captive Insurance Company: Blue Bell Ice Cream

Blue Bell is often referred to as Texas’ ice cream. It is sold in many restaurants and is prominently displayed in most local grocery stores. Blue Bell has also suffered from several product recalls over the past several years. Last year, they recalled a large amount of product due to a listeria contamination at their Brenham, Texas facility. And now there is news of another recall.

Blue Bell Creameries recalled select flavors of ice cream distributed across the South after finding chocolate chip cookie dough from a third-party supplier for use as an ingredient was potentially contaminated with listeria, the Brenham, Texas-based company announced Wednesday.

Blue Bell said it was recalling half gallons and pints of Blue Bell Chocolate Chip Cookie Dough and half gallons of Blue Bell Cookie Two Step made at its Sylacauga, Alabama, creamery after intensified internal testing found the cookie dough from Garner, Iowa-based Aspen Hills Inc. potentially tainted, according to a Blue Bell statement.

While these facts are unfortunate, they also point to several common insurance policies issued by captive insurance companies.

Product Recall

This is at the heart of Blue Bell’s current situation; the company must expend funds to remove product from store shelves. A product recall policy would cover this expense.

Product Liability

Any company that places a product into the “stream of commerce” faces the possibility that the product will harm a third party. A product liability policy would cover the company for this risk.

Brand Rehabilitation

Blue Bell is currently facing a PR nightmare; their name is once again associated with a tainted product. The company needs to engage in “brand rehabilitation;” they’ll have to hire a PR firm to improve their public image. A Brand Rehabilitation policy would cover this risk.

Legal Liability

It’s probable that Blue Bell will have to hire an attorney to sue the third-party vendor who provided the cookie dough. A legal liability policy would cover this risk.

Contractual Liability

A contractual liability policy provides coverage for two distinct contract risks: a third party breach — where the counter-party doesn’t perform their contractually agreed too promises — and “anticipatory repudiation,” where the counter party acts in such a manner that the parent company would be forced to breach. A contractual liability policy would cover the costs associated with this risk


Mr. Stewart has a masters in both domestic (US) and international taxation from the Thomas Jefferson School of Law where he graduated magna cum laude. Is currently working on his doctoral dissertation. He has written a book titled US Captive Insurance Law, which is the leading text in this area.

He forms and manages captive insurance companies and helps clients in international tax matters, US entity structuring, estate planning and asset protection.

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