At a glance
- The breakdown of production machinery can affect the smooth operation of many companies
- Some engineering covers are, quite often, overlooked, and breakdown of production machinery is not usually insured
- Zurich’s new streamlined Engineering Combined product puts the entire core engineering covers under one package
When machinery or plant breaks down it can prove to be a heavy burden for a company if it brings production to a shuddering halt.
Manufacturers, warehouses, wholesalers and processors rely on machinery to carry out many of their operations.
Although production machinery is normally covered under a property policy for the usual perils, any automatic breakdown extension is usually restricted to building services only. This means that general production machinery items such as order pickers, cranes and conveyor systems need to be considered for engineering cover.
“If a key part of your production line breaks down and that affects production, then you’ll need to get the offending item fixed and back in use as quickly as possible,” said Andy Penny, Engineering Lines Manager at Zurich.
“For as long as production is stopped, the workforce may be idle and the client is losing revenue, profit and potentially customers. With today’s ‘just in time’ production efficiencies, it is less likely that companies will have enough finished stock to cover orders.”
Andy added: “If you have a prolonged stoppage because it is going to take weeks or even months to replace a key component then clients might have to lay off staff, and may have to pay extra charges to expedite the repair including air freight if the part has to come in from abroad. To mitigate interruption with the business they may also have an increased cost of working for overtime or outsourcing as they try and fulfil orders.”
Zurich has developed a new product, called Engineering Combined, that places all of the core engineering covers under one package. Due for launch in the autumn of 2013, it will make it easier for brokers and their clients to spot potential gaps in a client’s insurance and cover those needs appropriately.
“Breakdown is often seen as a luxury purchase by clients but many do have a genuine exposure and some brokers have picked up on that,” said Andy.
“Property breakdown extensions might, for instance, cover the breakdown of a passenger lift, which probably won’t adversely affect the client’s business. Breakdown of an order picker, however, could have a serious impact but will usually be excluded because it is not considered part of the building services.”
The Engineering Combined product, which offers both insurance covers and inspection under a single offering, is a new approach for Zurich Engineering.
For as long production is stopped, the workforce may be idle and the client is losing revenue, profit and potentially customers
Andy Penny, Engineering Lines Manager at Zurich
The combined policy has the benefit of brokers and clients being able to pick and choose components of the policy, without the requirement to buy all the covers. It may also be possible to reduce overall premiums by buying the covers together.
Zurich can also offer its expert knowledge and advice on any potential risk management solutions, especially for larger risks.
“What we’ve tried to do is come up with ways of applying blanket ratings to risks and on larger ones we will go out and do a fact find,” added Andy.
“We can also help people build robust plans around disaster recovery. For larger clients, we’ll send a qualified risk engineer to assess the risk and if there are any perceived areas of weakness then we will make recommendations.”