What is a good manufacturing risk?
While many brokers associate FM Affiliated with occupancies such as offices, warehouses and healthcare, it should be noted that we write a lot of best-in-class manufacturing, such as plasticworking, metalworking, printing and assembly. In fact, manufacturing is one of the top two occupancies we write.
As a research-driven, engineering-based company, FM Affiliated is well positioned to write manufacturing risk. However, like any account, it must be within our risk appetite. Depending on the occupancy, FM Affiliated manufacturing clients typically range from US$75,000 to US$750,000 in premium. High hazard occupancies like chemical, power generation, and pulp and paper fit FM's risk appetite.
But what does a good manufacturing risk look like? To help answer this question, consider these four risk attributes, which contribute to a successful placement of manufacturing accounts in the middle market:
- Reliable Sprinkler Protection: FM Affiliated loss history shows that sprinkler protection is the best defense against fire. In fact, 90% of fires are controlled by six sprinklers or less. This means that properly sprinklered facilities are quicker to return to normal business operations after a loss than those that are not. Ensure your manufacturing clients’ sprinkler systems are diligently maintained, tested and inspected, and have a reliable water supply.
- Adequately Protected Special Hazards: Ignitable liquids, combustible dusts, aerosols and gas-fired equipment are special hazards commonly found within the manufacturing space. If a fire develops where one of these hazards is present, the sprinkler system can be quickly overtaxed, resulting in a potential catastrophic event. Clients can significantly mitigate many of these exposures by investing in a shutoff device, containment methods, spot sprinkler protection or ignitable liquid storage cabinets.
- Good Construction: Noncombustible construction is best, as even adequate sprinkler systems can be overwhelmed by fires involving combustible construction. Avoid wood construction, spray foam insulation and unapproved plastic panels and decks.
- Good Human Element and Preventive Maintenance Programs: FM Affiliated loss history shows that proper inspection and maintenance programs, as well as documented emergency response plans and business continuity plans, can prevent or mitigate up to two-thirds of losses. They require very little capital to implement and the benefits are substantial.
What about the submission?
When preparing your manufacturing submission, go beyond construction, occupancy, protection and exposure. Provide as much information as possible to inform your FM Affiliated production underwriter. For example, building plans, sprinkler drawings, water testing results, appraisals, annual sales, business income worksheets, previous carrier reports, and equipment lists and photos can all help improve understanding of your client’s risk and ensure contract certainty.
Each manufacturing risk is unique and may require an engineering visit prior to quoting. Contact your FM Affiliated account team to find out if your client is a good fit. Be sure to provide ample lead time to maximize the prospecting process.