Insurance in manufacturing
The manufacturing industry, anywhere in the world, is critical to keeping the economy moving. The sector is also one of the most technical, involving a wide range of moving parts including logistical, mechanical and labour resources. It is important that cover is tailored to each business.
Australia has long been a manufacturing nation, and despite a transition away from automotive manufacturing the over the past number of years, the industry remains alive and well. As the world prepares to enter Industry 4.0 — where new technologies will enable entirely new high-tech supply lines — the future is bright for Australian manufacturing.
Given its nature, manufacturing is exposed to a great many risks, more than most other industries. These risks fall into a number of broad categories, including supply line risk, public liability risk, equipment and premises risk, and operational risk.
Any manufacturing business, no matter its scale, should look at an appropriate range of cover. The first step in this process may be to work with a trusted risk adviser who knows the sector well, whether a business makes clothing, electrical devices, chemicals, food, or machinery. A trusted risk adviser with an understanding of supply chain management may be able to work with you to provide personal advice based on the potential impact should the system fail, on the business, clients, and suppliers.
As with any business, there is a suite of fundamental protections available that are designed to protect any business financially, including premises, equipment and materials damage cover, and also others such as theft, and fire. Many businesses today purchase some form of cyber insurance, as everything from customer data to company records can be stored digitally.
Workers’ compensation is critical and will often form the largest part of an insurance expense on a business. It can keep workforces financially protected in case of injuries in certain instances, and can protect businesses from recompense.
Business interruption cover is designed to protect against certain occurrences that prevent businesses from being able to deliver on their obligations, whether from an internal source such as machinery failure or interruption to raw materials supply, to external risks including logistics issues or temporary shutdown of facilities through utility interruption.
Public liability insurance can include protecting the public from injuries that may occur through the operations of a business including deliveries and visitors to business premises, but there are also insurance protections that can provide cover for accidents or injuries that occur through defects in the design and manufacture of some goods.
Insurance policies that cover logistics operations can include the transit of both finished goods and the raw material used to create them, and also expenses allocated with potential product recall exposures.
Pollution liability insurance is also an important cover, either for the protection of an individual business or expanded to cover contractors working in a business. It can protect a business against the expenses associated with rectifying environmental damage that may occur as part of the business’s operations.
As a business moves into the large scale, there are other more unique insurance protections that can be acquired. For example, corporate travel insurance might be valuable to protect companies and their employees from financial loss through illness, delays or accidents while travelling.
Professional indemnity insurance may be appropriate for businesses that operate in a space where there is the potential for significant personal losses should a negative insurable event occur. It can also protect businesses that provide advice or a service, should a client suffer financial loss through an act, omission or breach of professional duty.
For businesses that export goods, then there may be a need to examine a range of specific multinational insurance solutions, depending on factors like the regions the team will visit, and the nature of the products distributed. This can mean the insurer deploying a local team with local knowledge in the region where a claim is being made, or being able to use the insurer’s resources and insights to gain specific knowledge in the regions a business operates.
The insights above only serve as a broad overview of what the insurance market for the manufacturing sector can include. It is imperative that you seek policies that are designed specifically for the range of risks your business may face. To discuss this sector further, contact your AB Phillips risk adviser.
The information provided in this blog is factual information only and not intended to be advice about which financial products are suitable for your circumstances. Before you make any decisions about whether to acquire an insurance product we recommend you obtain advice by contacting an AB Phillips risk adviser.