What are the key risks in the manufacturing sector?

Morgan Insurance Manufacturing InsuranceManufacturing 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.

Did you know?

The manufacturing industry has the
highest number of workers’ insurance claims when compared to other industries.

(icare, NSW workers insurance claims 2017-18)

Recall

Automotive and industrial manufacturers are subject to the highest volume of product recall insurance claims, followed by food and beverage manufacturers and retail goods manufacturers.

(Statistica, Share of product recall insurance claims from selected industries worldwide – 2017)

Intellectual property theft, interruption of operations and direct theft of funds are three of the biggest cyber risks facing manufacturers.

(RSM, Cybersecurity risk in  manufacturing: The risk is real and increasing, 2019)

What insurance should you take out – and what can it cover?

Insurance can protect you and your employees onsite, on the way to work and in your office

Type of coverPotential benefits
Business pack or Industrial Special RisksHelps 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 products liability
  • tax audit
  • theft, and theft or loss of money.
Public and product liabilityCan 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.
Product recallCan 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.
CyberHelps safeguard you and your business 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 insuranceTakes 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.
Management liabilityCan protect you against legal action for a breach in relation to an employee.
Workers’ CompensationCan cover the cost of your employees’ wages, rehabilitation and medication if they
become sick or injured through their work.

Limits, excesses and exclusions

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.

CONTACT MORGAN INSURANCE

Address: 75 Redfern St, Cowra NSW 2794
Phone: 02 6342 4861
Freecall: 1300 915 024
Email: enquiry@morganinsurance.com.au

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Contact Morgan Insurance today on 1300 915 024.

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