P&C the September 2022 issue

Key Considerations for Manufacturing Insurance        

Q&A with Dave Young, Regional VP–Branch Operations, EMC Insurance Companies
Sponsored by EMC Insurance Companies Posted on September 1, 2022

Leader’s Edge caught up with Young to talk about what agents should look for when partnering with a manufacturing insurer.

Q
What is your take on the manufacturing market and its outlook?
A
The niche is growing and vibrant and has increased in number by an average of 1.4% each year over the last five years, according to IBIS World. It is also varied and includes automated factories, mills and plants as well as small businesses that make things by hand. We believe the manufacturing market remains healthy despite the pandemic and resulting economic and supply chain challenges of recent years.
Q
What should manufacturers and their brokers/agents look for in an insurer?
A

It is important to look for an insurer that has a long track record in the niche and writes a lot of this type of business—someone who specializes and knows manufacturing deeply. Insurers should have a broad risk appetite and geographical reach to be sure they can meet the needs of manufacturers looking to expand. At EMC, we write more than 1,700 manufacturers in 41 states across the country as a part of our program.

Also make sure to ask about the company’s retention rate, which is a key indicator of customer satisfaction and competitive and stable pricing over the long term. Lastly, due to the size of manufacturing accounts, it is important that insurers have financial strength and stability—and that they carry high marks from ratings agencies.

Q
You mentioned specialized knowledge and expertise. Are there also specialized coverages manufacturers should specifically look for?
A

Yes, manufacturers should partner with an insurer that can offer specialized protection and a full suite of coverages that may be needed. Beyond the essential coverages like property, general liability, commercial auto, workers compensation and umbrella, look for:

• Manufacturing errors and omissions: covers financial damages your company could be liable for as a result of an error in the manufacturing process

• Delivery errors and omissions: provides protection if a customer suffers financial damages due to a delivery mishap

• Cyber: provides protection for responding to and recovering from a data breach or cyber attack

• Employment practices liability: pays for liability damages and defense costs due to claims of discrimination, wrongful termination and harassment.

Q
What are the top causes of loss you see in the manufacturing space?
A

Especially in the manufacturing industry, ensuring a safe and efficient work environment is paramount to overall productivity and profitability—not to mention employee well-being. Maximizing up time is what it is all about, and mitigating accidents is key.

The top five loss drivers we see at EMC are:

• Ergonomics issues and overexertion

• Struck-by-object accidents from forklifts, cranes and other large equipment

• Slips, trips and falls, especially from spills, weather and ladders

• Auto accidents involving employee drivers

• Fire accidents from things such as improper storage of combustible materials, faulty electrical equipment, and flammable liquids.

Q
So given those losses, are loss control services something special to look for?
A

Absolutely. It is crucial for employee safety and the prevention of accidents and costly losses. Manufacturers need a partner that can go beyond the basic loss control survey, working with them to create custom workplace safety plans, such as hazard and ergonomics assessments and slip-and-fall prevention programs. Make sure the insurer offers a robust set of online tools, on-demand training and other services.

Finally, ensure there is a dedicated loss control staff who provide review of specialized industries and do risk reviews of customers.

Q
Do many insurers offer specialized workers comp loss control services?
A

Yes, they do, but not all are created equal. Manufacturers need medical management services that help employees receive appropriate, cost-effective care after an injury and return to work as quickly as possible. Look for services such as:

• On-call nurse or work injury hotlines—make sure to check into fees, as some companies offer this for free, while others charge for these services

• Medical bill review

• Pharmacy management

• Utilization review

• Case management

• Rehabilitation services

• Return-to-work programs

• Catastrophic claim management

• Prework screening

• Programs for drug free workplaces and wellness.

Q
Insurance is never more important than at the time of a claim. How can manufacturers and agents/brokers assess an insurer’s claims handling services?
A

Nothing is better than first-hand knowledge and word-of-mouth recommendations. I’d encourage them to ask around. Ask manufacturing peers at other companies (perhaps in adjacent industries if that feels more comfortable) about what insurer they use. Pay special attention if someone you know has experienced a claim and what they say about how it was handled. Was there local, personalized service? Was the response fast? Were communications timely? Answers to those questions will be very telling.

Lastly, ask about claimant service scores. Virtually all companies track this and should be willing to share.

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