This article appeared in the January 2019 issue of MiMfg Magazine. Read the full issue and find past issues online.
As 2018 ends and 2019 begins, it’s the perfect time to take stock of what challenges were overcome, what successes were had and what potential disruptions can be mitigated in the coming year. Nearly all of the manufacturers I work with share challenges in regards to finding talent, the place of technology in their unique processes and how to protect their data. These are all easily seen, monitored and discussed on a daily basis. Still, there are some challenges to overcome that many don’t know about until a risk management review and insurance audit or, in the worst cases, a nasty claim.
Four of the most often-overlooked details to a manufacturer’s risk management and insurance program are outlined below.
Workers’ Compensation Claims
While most manufacturers know they need to have workers’ compensation coverage, they don’t fully understand the amount of control they have over their own premiums. A clean loss history and a good safety plan are great starting points, but many don’t realize the impact they can make on their own premiums post claim. Some of the ways to best control your brand’s destiny include asking:
- Was the injury proven to be legitimate and while on the job?
- Are the adjustor’s reserves reasonable?
- Are the adjustor and agency actively involved in the claims handling process to ensure it is moving along with best practices?
More often than not, I find manufacturers are uninsured entirely for their pollution exposure. Those who are insured, often times, are not aware of the specific coverages they have or what can trigger a policy. It’s common for a pollution policy to only be triggered when a government entity is requiring the manufacturer to remediate a pollutant – leaving the manufacturer on the hook for any other instances. In many cases, this would leave a manufacturer without adequate coverage.
Applications for insurance can be daunting, especially business income worksheets. With that said, these worksheets ensure the proper payout, should you not be able to continue business for one reason or another. In some cases these worksheets will also help wave any coinsurance penalties that may otherwise apply. At first these may seem intrusive and time consuming, but should you be unable to continue production, for a covered cause of loss, the details will matter.
It seems that nearly every day a new organization is dealing with a cyber breech and manufacturers are certainly on the radar of hackers. The first step any manufacturer needs to do is either build or outsource a cybersecurity team. While many policies have some small sublimit of coverage, it is critical to buy a fully built out and individual cyber policy.
The lists above are some, but not all of the areas overlooked by your industry peers. Having an in-depth risk management and insurance review as you enter the New Year will help ensure you are forecasting premiums correctly, getting the best return on investment possible and properly matching your policies with your risk tolerance.
Guy Hurley is an MMA Premium Associate Member and has been a member company since July 2006. Visit online: www.ghbh.com.