Brett Hooperner, Underwriting Director sentry insurance
Protect your business in an uncertain economy by mitigating risk and managing coverage
Over the past few years, the food processing industry and its suppliers have been challenged by fluctuating supply chain costs, inflation, shifting consumer demand, and labor shortages. Yet the pressure remains on businesses to maintain inventory and meet the orders of consumers in a hungry world.
In the automotive industry, the lack of chips for seat warmers is a consumer inconvenience. But a missing component in a food production line machine can have far more detrimental consequences. As problems in his supply chain escalate and the cost of everything rises, it can become difficult to run a successful business. From groceries and critical machinery repairs to fuel for delivery vehicles, prices continue to hit all-time highs.
Adjusting insurance coverage may seem like a viable option when assessing where to control costs in the current economy. However, doing so may lead to more financial risk rather than savings if you reduce critical coverage or overlook the importance of adding other coverage. , is one of the most cost-effective ways to protect your business from bigger and unexpected losses. This article summarizes some cost-effective steps you can take to protect your business in 2023.
Strengthen your safety program
Labor shortages have plagued the food industry for years. An operational accident can harm your most valuable asset: your employees. Many workplace accidents are preventable, and the potential costs to businesses from injury lawsuits and medical bills are rising. One of the most common concerns in food manufacturing is inadequate machine guarding. In the world of conveyor belts, band saws and wrapping machines, removing or manipulating guards for convenience is not only illegal, but can lead to injury and related costs.
Similarly, employees may be prone to muscle strain, imbalance, fatigue, and other soft tissue injuries due to the nature of their work. Poor workplace ergonomics can contribute to employee injuries in this area.
In response, it is critical to initiate a formal safety plan or strengthen current safety plans to avoid the possibility of injury to the team. There are several ways to foster a culture of safety.
- Holding regular safety meetings
- Work with your insurer to develop a comprehensive safety plan
- Have employees take turns leading safety meetings and taking responsibility for safety planning.
- Offer incentives for safety, such as bonuses
- Encourage leaders to model safe behavior while working on the factory floor or driving company vehicles
By taking a proactive rather than a reactive approach to safety, accidents can be prevented from occurring in the first place. Results that benefit your team and your business.
Prioritize driver safety
The cost of accidents is rising as the prices of most vehicles remain high. As for your insurance policy, make sure you have sufficient physical damage coverage to account for higher repair costs. But more importantly, it’s time to take a closer look at driver safety.
If you hire or commission employees to move products and equipment behind the wheel of a company vehicle, it is essential to use Laser Focus to examine the employee’s driving history. Do not relax hiring and training standards in an environment where you feel the need to meet delivery needs.
A thorough safe driving program can save your business significant costs and reduce the risk of accidents. A quality program should typically outline a formal process for reviewing driver selection criteria, education and training standards, and safe driving practices. Before hiring a new driver, check their vehicle report (MVR). Putting underperforming drivers in company cars can create additional liability risks for your business. Let’s use an example:
Imagine a hypothetical scenario where one of your employees gets distracted while making a delivery and ignores a red light. In this scenario, the employee also has several driver’s licenses on record, including two of her DUIs years ago. In this case, they cause an accident that damages another car and seriously injures the occupants of the other car.
If that accident results in a lawsuit, lawyers may ask if you looked at the driver’s MVR profile before hiring them. Your business can face serious financial and legal consequences if you let a driver with a bad driving record on the road in a company vehicle.
In the example I just gave, the damage to a company’s reputation after an accident can also affect customer loyalty and employee retention. Don’t let one avoidable accident affect everything you’ve worked so hard for.
Update equipment and property values
An often overlooked consequence of inflation and supply chain issues is rising building valuations. Equipment, buildings and vehicles may have increased in value since the last update. This means that if your food processing equipment fails or your building is stormed, there may not be sufficient coverage to help rebuild, repair or replace your equipment and facilities. To do.
And even if supply chains are restored, shortages will still exist. That means it can take weeks or even months to replace damaged possessions. Fortunately, he can make two adjustments to the policy to protect businesses from inflation and supply chain delays.
- Include an inflation guard clause in your policy. Inflation guard clauses automatically increase the value of the insured property to compensate for material cost increases during the life of the policy.
- Consider expanding your business income coverage. If your business suffers a catastrophic loss, it can take a long time for your business to fully recover due to supply chain delays. While your business recovers, you’ll need to continue to balance paying employees, managing bills, and other expenses. You may already have business income protection to protect your business from the worst-case scenario, but talk to your insurance company to make sure you have enough coverage considering longer repair times in 2023. Please confirm that. In some cases, repairs can take him 6-12 months longer than it did years ago.
reduce prepaid insurance premiums
To keep your premium under control while protecting your business, you can also increase your deductible. But it’s not a decision to be taken lightly. First, you need to develop a thorough safety policy and hold your business accountable. Work with your insurer to see where you can improve your risk management program. Food processing businesses that integrate safety throughout their operations are often the most successful in reducing costs.
Establishing, enforcing, and adhering to a safety plan can help reduce risk across your business, increase deductibles with confidence, and reduce ongoing costs. This plays a big role in keeping the cost of long-term insurance in check. Please consult with your insurer to determine the best approach for your business.
go to next step
As the industry faces labor shortages, rising material costs, and irregular supply chains, insurance is one of the few ways to financially protect food processing businesses. Still, the trends and tips we’ve shared in this article are meant solely to help guide you in the conversation with your insurer. We help you make informed decisions.
By updating our policies a bit and prioritizing safety, we can give you peace of mind that your business is protected and give you more time to focus on your employees and customers. Stay safe and we look forward to seeing you next year.
Brett Hoopingarner sentry insuranceSentry provides property and casualty insurance, property and casualty insurance, life insurance and retirement products to the food processing industry. For more information, visit sentry.com.