Are insurers changing their appetite?

22 June 2016

Despite the continuing debates over composite panelling and the extent of fire protection, on the whole the property insurance market for food manufacturers has been somewhere between benign and competitive since the severe market hardening of the early 2000’s. Following 9/11, the collapse of insurer The Independent and a spate of food factory fires, food companies were faced with the twin threat of both reduced capacity (insurers not wanting to take 100% of any risk) and premiums rising by double or more as the market pulled back from the industry.

Today, whilst there is no sign of premiums rising as dramatically we have started to see insurers pull back on their capacity for food businesses, especially those operating from a single site.

Having spoken to a number of food specialist underwriters, this has been a reaction to a number of recent losses, especially those in the bakery industry.

The recent fire at the Morrisons bakery in Wakefield that took 15 engines to tackle follows on from significant fires in Finchley, Royal Park and Tottenham, the latter needing over 70 fire-fighters and 10 engines to deal with a blaze that led to a building collapse and four people needing to be led to safety from the smoke filled property.

Industrial oven incidents, electrical fires and arson appear to have been the major causes of the recent fires, exacerbated by polystyrene panelling which is still prevalent in many food production facilities.

One underwriter from a leading international insurer has advised that all upcoming renewals in the food sector will be closely reviewed (whether bakery related or not), with keen focus on reducing capacity on all manufacturers. This will mean that brokers will have to find additional insurers to provide full cover to their client on a co-insured or layered basis.

In addition to this however another major UK insurer has suggested that they will not look to co-insure with any other carriers, further reducing the available capacity for clients in the sector!

This will also serve to heighten the debate around building construction and fire protection in food manufacturing, especially with regard to the balance between capital expenditure and premium impact.

My suggestion therefore would be to find out what the intentions of your insurers are well in advance of renewal. Leaving these discussions to the final weeks of renewal is likely to result in unnecessary premium increases if you are forced to look at alternative insurers and programme structures.

Whilst these appetite changes are all too common in the UK insurance market, there is still enough competition to ensure that you do not suffer as a result of the losses that have impacted your peers.

For further information, please contact Jon Miller, Head of Regional Food & Agri Practice on +44 (0)121 676 7806 or email