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How attractive is your business to insurers?

Risk & Analytics

By Huw Chandler | January 14, 2020

Insurance market conditions are currently challenging for the Food & Drink sector. Understanding what insurers are looking for, in terms of quality of your risk and risk management standards will drive a much better result, both in terms of competition for your business, pricing and cover.


With a number of global insurers recording significant losses over the past few years, and high levels of consolidation in the insurance industry, markets are now hardening. This means that insurers are:

  • Being more selective on where they place their capacity by targeting perceived higher quality / lower hazard risks.
  • Reducing the capacity they offer requiring more insurers to provide cover limits
  • Looking to reduce their exposure to claims by providing lower limits than previously
  • Requiring greater technical risk information and positive responses and actions to concerns and risk engineering recommendations

Unfortunately there have historically been many significant losses in the food industry, across a wide spread of occupancies, ranging from cooking processes (heat application, deep fat frying, dust explosions etc.) raw material storage (idle pallets, increased use of plastics and other combustible packaging etc.), warehousing (high bay warehouses, increase in size, mechanisation and automation), human element issues and controls (hot work controls, maintenance cutbacks) and vandalism (arson).

The changing food and drink industry

Consolidation within the industry has meant that most plants are running at higher utilization. Spare capacity has reduced so alternative capacity may be limited. This coupled with a lack of suitable readily available warehousing and storage, in particular cold storage can have a real impact on business continuity.

Additionally, with the current pressures on the construction industry, reinstatement periods are often much longer than the original build time of the facility.

Willis Towers Watson approach

We know what insurers are looking for and so focus on making our clients as attractive as possible to insurers by highlighting positive risk features and controls.

How insurers view your business

Insurers analyse risks and set terms (premium, rates and cover) using common industry factors in the COPE acronym - Construction, Occupancy, Protection & Exposure; plus importantly, Business Interruption, often a larger exposure than the Property.

It is important that each of these elements is understood and that good standards are in place to make the individual location or group attractive to the insurance market.

Each of these is addressed in broad terms below:


The presence of combustible insulation and panels in the food industry is well known. This is historically the material of choice, due to cost, hygiene requirements, and very good insulation properties. In the event of a fire it is important that any combustible load in the building doesn’t accelerate the incident.

In an ideal world any combustible panels should be replaced with non-combustible alternatives, and if this is not possible, there should be a focus on replacing them in any high inception risk areas.

Many businesses do not fully appreciate the differences between the building regulations, which provide primarily life safety protection, and best practice for Property protection.


Many factors in the food production process add to a perceived increase in risk. These include application of heat, cooking and in particular deep frying. Additionally, high speed lines have increased the combustible load from packaging materials and idle pallets within food plants. High bay warehouses and more concentrated stock levels are also risk factors. It is important that these are reviewed on a regular basis, with a robust MOC (Management of Change) process in place. This should involve all stakeholders, to demonstrate compliance to insurers.

It is important that these factors are managed, with suitable human element controls in place, including strict maintenance procedures, often in excess of the OEM (Original Equipment Manufacturers) guidance:

  • Deep cleaning regimes should be in place, particularly in ‘hidden’ areas such as extract ducting where grease and fat residue can build up, adding to the fire load.
  • Contractor controls, particularly on Hot Work should be strictly enforced in all areas, with extra levels of enforcement where combustible construction is present.


On any new facility it is often relatively easy to include fixed protection systems, such as sprinklers, as space and time permit and budgets may be available. However on existing facilities, retrofitting is generally not achievable, due to space, production facilities and costs..

If full fixed fire protection systems such as sprinklers are not available, then a risk review of the higher hazard fire areas and processes should be undertaken. This should assess the potential exposure level in these areas, to identify where local spot protections, such as local water spray, water mist or gaseous systems could be installed to minimise any incident.

It is important that all fire protection systems are designed, installed and maintained by appropriately qualified specialist contractors, using listed or approved equipment in accordance with recognised design standards.


This is often difficult to assess, as it will include direct external exposures, such as neighbouring facilities, indirect exposures such as rail lines or nearby airstrips, as well as natural hazards, such as storm and flood events.

Spreading risks from neighbours should also be considered.

Natural hazards are now a much more frequent event, with increased rainfall, climate change, and higher levels of urbanisation adding to concerns. It is important to demonstrate effective risk management to insurers in these areas.

Business Interruption

In the food and drink sector, it is imperative to demonstrate operational resilience to insurers - to mitigate the impact of a loss and to retain your customer base and contracts.

It is important to demonstrate to insurers that effective business continuity / disaster recovery plans are in place that are up to date and reflect business changes.

Property damage business interruption (PD/BI) insurance indemnifies an organisation against loss of profit (or revenue) together with significant additional increased costs to expedite recovery.

PD/BI and business continuity go hand-in- hand in terms of operational and financial protection for an organisation. Insurance on its own could lead to a situation where Property is reinstated after a period, but customers have all found other suppliers. Business continuity planning on its own could cause financial issues during a recovery due to lost profit and increased costs that may not be adequately covered by insurance.

How can we help?

Our deep insight ensures that we present the best possible view of your operations and business resilience, in order to generate insurer appetite and competition to negotiate the best possible results in terms of cover and cost.

We work with our clients to reduce risk across their business and evidence that to insurers.

We have strong relationships with all the key insurance markets for the sector and an effective broking strategy, which allows sufficient time to drive the best results and ensures no last minute surprises.

To find out more, or to book a meeting, please contact our Food & Drink Practice Leader, Sue Newton.


Sue Newton
Food & Drink Practice Leader

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