Insurance for the manufacturing sector
What are the key risks in the manufacturing sector?
Manufacturing is a diverse industry, and one that is changing at a rapid pace thanks to the effects of technology and globalisation. The risks manufacturers face are complex, and could range from lost production time due to a mechanical outage, fire or supply chain failure, to a product recall due to a defect. In many cases, they will also be specific to what your business manufactures.
Workers’ compensation is also a major risk for manufacturing businesses and cyber insurance is growing in importance as hackers pose a risk to both the smooth functioning of your systems and machinery as well as your confidential business data.
Who should consider insurance?
Insurance for manufacturers covers different manufacturing methods and product types including food, pharmaceutical, clothing, automotive, chemical, electrical, industrial and machinery, and many others. Insurance can protect you and your employees onsite, on the way to work and at work. Having the right cover is essential to help protect your business, your staff and your trading partners.
“Australia’s manufacturing industry contributes around $100 billion to Australian GDP annually and employs around 900,000 people.”
(Australian Bureau of Statistics, 2020.)
Did you know?
There has been a growing trend of large losses in the manufacturing industry in recent years.
(Manufacturers’ Monthly, Balancing robotic risks and rewards in manufacturing, 2020)
23%
23% of global cyber attacks targeted the manufacturing industry in 2021, which suffered more attacks than any other
industry.
(IBM, X-Force Threat Intelligence Index, 2022)
The manufacturing industry had the third-highest number of serious workplace injury claims of any industry in 2019-20.
(Key work health and safety statistics, Australia 2021)
What insurance should you take out - and what can it cover?
Management liability
Can protect you against legal action for a breach in relation to an employee
Public and product liability
Can cover claims against you if it’s held that a negligent act by your business or its products results in personal injury or property damage.
Errors and Omissions cover
Covers liability where there is no personal injury or property damage.
Product recall
Can cover your business against the expense of a recall and provides assistance with crisis management and public relations to restore the reputation of your business.
Cyber
Safeguards against expenses and legal costs if your website or other systems are hacked and your system cannot be used or customers’ details are stolen.
Motor Insurance
Takes care of your valuable business vehicles, with cover to help: if you or your staff damage another person’s vehicle, repair your vehicle after an accident or replace it if it’s written off, replace a lost or stolen vehicle, safeguard you against legal liability.
Business pack or Industrial Special Risks
Helps safeguard your business premises and contents against: damage caused by fire, storm or accidental damage, equipment or machinery breakdown, business interruption, employee dishonesty, property or glass damage, legal issues, such as with public and product liability, tax audit, theft, and theft or loss of money.
Workers Compensation
Can cover the cost of your employees’ wages, rehabilitation and medication if they become sick or injured through their work.
What usually isn't covered?
Policy exclusions, the excesses you need to pay and limits of liability can vary greatly depending on your insurer and the requirements of your business.
Case Study
Susan runs a manufacturing business making cookies, which she supplies to a major airline group. On a flight one day, plastic fragments were discovered in one of her cookies, sparking a recall and product liability lawsuit, and attracting negative publicity. As Susan had both product liability and product recall insurance, the costs associated with the recall and lawsuit were covered, as was the cost of restoring the reputation of her brand following the incident.
FAQs
You might consider changing providers to get better rates, improved coverage, better customer service, or access to specialised policies that suit your evolving business needs.
Review your policy regularly, compare it with competitors’ offerings, and consult with an insurance professional to assess if your coverage aligns with your current business risks and needs.
Risks include potential coverage gaps, policy exclusions you might overlook, or losing loyalty benefits with your current insurer. So it is important to carefully review new policies to ensure they meet all your needs.
The process is usually fast once we have all the right paperwork, but it can vary depending on the complexity of your business and the type of coverage needed. This means it is best to be prepared and start looking before your existing insurance expires.
Some policies have cancellation fees or short-rate penalties. Check your policy or ask your current insurer about any potential fees before switching.
You’ll typically need to provide business details, claims history, financial information, and specifics about your operations, assets, and employees.
Coordinate the start date of your new policy with the end date of your old policy. We can help you minimise your exposure to risk when changing suppliers, but it is important that you start the process early.
An insurance broker or professional represents multiple insurance companies and works on your behalf to find the most suitable coverage. Direct insurers are individual companies that sell their own policies directly to businesses.
Brokers offer expertise, access to multiple insurers, personalised service, assistance with claims, and we can often negotiate better rates or coverage terms.
Brokers typically earn commissions from insurance companies. In most cases, you won’t pay directly; similar to a mortgage broker, they are paid by the insurers.
Often, yes. We have access to multiple insurers and can leverage our relationships to negotiate competitive rates, or have products that are not available to the public.
Look for someone with experience in your industry, good references, proper licensing, and a wide network of insurers. They will be your point of contact when something goes wrong, so also consider their communication style and responsiveness.
Generally, yes. Professionals like us typically manage most communications, including policy changes, claims, and renewals, acting as an intermediary between you and the insurer.
Yes, a good broker will explain complex terms, policy details, and coverage options in plain language to help you make informed decisions.
Your specific needs will depend on your industry and operations, so it is best to chat so we can guide you through the risks you may not be aware of. Common types of insurance include general liability, property, professional liability, workers’ compensation, cyber liability, and business interruption insurance.
Review your coverage annually at minimum, but it is also best practice to review when your business undergoes significant changes like expansion, new products/services, or changes in operations.
Not necessarily. Premiums depend on various factors. A new insurer might offer lower rates, especially if your business circumstances have changed favourably.
Yes, we can often help you bundle policies (like combining property and liability coverage) to get discounts and streamline your insurance management.
First, communicate your concerns to your insurance professional or the insurer directly. If issues persist, you can file a complaint or consider switching providers again.
Look beyond just the premium price. Compare coverage limits, deductibles, exclusions, and additional benefits. Consider the insurer’s financial stability and reputation for customer service as well. Most importantly, make sure you are comparing like-for-like coverage.