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HOW TO INSURE SMALL MANUFACTURERS“We Make a Few Products Here.”That Simple Statement Can Open the Door to an Entire World of Exposures.A manufacturer may occupy an ordinary-looking building in an industrial park.
But what happens inside? What do they manufacture? What raw materials come in? What processes are used? What machinery keeps production moving? Is there welding? Cutting? Painting? Chemicals? Heat? Dust? Pressure? What happens if the machinery breaks? What happens if a finished product injures someone? What happens if a fire shuts production down for six months? The building is only the beginning of the risk. THE PROBLEM WITH “THEY'RE A SMALL MANUFACTURER”“Small manufacturer” describes the size of the business. It doesn't tell you what the business does. A company making wooden cabinets presents different exposures from one fabricating metal parts. A food manufacturer is different from a plastics operation. A machine shop is different from a textile manufacturer. A company assembling products from purchased components may be different from one manufacturing everything from raw materials. And two manufacturers producing similar products can still have very different machinery, processes, customers and quality-control procedures. Before you can understand the insurance account, you have to answer one fundamental question: What happens between the time the raw material enters the building and the finished product leaves? WHAT THIS MANUAL WILL HELP YOU DOAfter working through this guide, a producer should be better prepared to: ✓ Conduct a professional manufacturing discovery conversation ✓ Understand the insured's manufacturing process ✓ Identify raw materials, work-in-process and finished-goods exposures ✓ Ask better questions about machinery and equipment ✓ Recognize fire and property hazards created by manufacturing processes ✓ Explore equipment breakdown exposures ✓ Identify business-income and production-interruption concerns ✓ Recognize products and completed-operations liability exposures ✓ Investigate quality-control and product-recall concerns ✓ Identify employee and Workers' Compensation exposures ✓ Ask about forklifts, vehicles and transportation ✓ Explore pollution and environmental concerns ✓ Recognize cyber and technology dependencies ✓ Identify umbrella and excess liability considerations ✓ Prepare stronger manufacturing submissions ✓ Compare proposals beyond premium alone ✓ Conduct stronger renewal conversations ✓ Prospect for manufacturing accounts more intelligently WHO SHOULD HAVE THIS MANUAL?How to Insure Small Manufacturers was created for: • New commercial-lines producers • Personal-lines producers moving into commercial insurance • Producers who occasionally encounter manufacturing risks • Experienced producers who want to develop manufacturing accounts • Agency owners training commercial-lines staff • CSRs and account managers servicing manufacturing clients • Independent agents looking for higher-value commercial relationships You don't have to understand how to operate the machinery. But you should understand enough about the business to ask: What do you make? How do you make it? What could interrupt production? And what could happen after the product leaves your building? WHAT'S INSIDE?Learn the Process Before You Quote the ManufacturerManufacturing DiscoveryDon't begin with: “How many square feet is the building?” Begin with: “Walk me through what you make and how you make it.” That conversation can reveal exposures an application alone may never uncover. Raw MaterialsWhat enters the facility? Wood? Metal? Plastic? Fabric? Chemicals? Food ingredients? Electronic components? The raw materials may create property, fire, theft, spoilage or other exposures. Work in ProcessA product may spend hours, days or weeks moving through production. What is its value while unfinished? What happens if a loss destroys partially completed goods? Finished GoodsWhere are completed products stored? For how long? What are they worth? How quickly are they shipped? Understanding inventory is an important part of understanding the property exposure. Machinery & EquipmentManufacturing often depends on specialized machinery. What would happen if a critical machine failed tomorrow? Could production continue? How long would replacement take? Could parts be obtained? Machinery isn't merely property. It may be the engine that produces the company's revenue. Equipment BreakdownElectrical and mechanical breakdowns can create losses that ordinary property conversations may overlook. Learn why equipment breakdown deserves its own discussion. Fire & Property HazardsHeat. Welding. Cutting. Flammable materials. Combustible dust. Spray finishing. Electrical equipment. Storage arrangements. Manufacturing processes can create property hazards that need to be understood before submission. Business IncomeA manufacturer may rebuild a damaged building. But what happens to revenue while production is stopped? Payroll continues. Customers may go elsewhere. Contracts may be lost. A manufacturing business may survive the property loss but struggle to survive the interruption. Products LiabilityThe exposure may continue long after the product leaves the manufacturer's premises. What does the product do? Who uses it? Where is it used? Could failure cause bodily injury or property damage? Understanding the product is fundamental to understanding the liability risk. Quality ControlHow does the manufacturer ensure products meet specifications? What happens when a defect is discovered? Quality-control procedures can be an important part of the underwriting story. Product RecallNot every product problem becomes a bodily injury claim. Sometimes the product itself must be removed, replaced or recalled. Learn why producers should recognize the difference between ordinary liability coverage and specialized product-recall exposures. Workers' CompensationManufacturing employees may work around: Machinery. Forklifts. Sharp tools. Heat. Chemicals. Repetitive processes. Heavy materials. Understanding what employees actually do is essential. Commercial Auto & TransportationDoes the manufacturer deliver its products? Pick up materials? Operate company vehicles? Use employees' vehicles? Transportation can create another layer of exposure. Pollution & Environmental ExposuresSome manufacturing operations use chemicals, solvents, fuels or processes that can create environmental concerns. The producer doesn't need to become an environmental engineer. The producer needs to recognize when the exposure deserves additional investigation. Cyber & TechnologyModern manufacturers may depend on computerized equipment, automated systems, electronic ordering and digital records. A cyber event may affect much more than the office computers. It may affect production itself. Umbrella & Excess LiabilityProducts liability, automobile exposures and other operations may create reasons to consider additional liability limits. The Underwriter SubmissionManufacturing accounts need a story. Don't send: “Manufacturer. $2 million sales. Please quote.” Explain: What they manufacture. How they manufacture it. Where products are sold. Who uses them. What machinery is involved. What controls are in place. Help the underwriter understand the business. Proposal ComparisonTwo proposals with similar premiums may provide very different protection. Help clients compare coverage, limits, valuation, deductibles, endorsements, exclusions and other important provisions. RenewalsManufacturers change. New machinery. New products. New customers. New processes. New buildings. New materials. Higher sales. Different suppliers. A good renewal conversation rediscovers the manufacturing operation rather than simply updating last year's application. REAL-WORLD PRODUCER THINKINGThe manufacturer says: “We just bought a new machine.” Ask another question. “We started making a new product.” Ask another question. “One customer now represents almost half our sales.” Ask another question. “We occasionally do some spray painting.” Ask another question. “We started shipping products overseas.” Definitely ask another question. Throughout the manual, practical situations help producers develop the habit of: HEAR IT What did the manufacturer actually tell you? ASK ABOUT IT What additional information does that create? VERIFY IT What needs to be confirmed? DOCUMENT IT What belongs in the agency file? TAKE THE NEXT SAFE ACTION What should the producer do next without exceeding his or her authority? Good commercial producers learn to recognize the sentence that changes the risk. DON'T WAIT FOR MANUFACTURERS TO FIND YOUSmall manufacturers may be some of the most overlooked commercial prospects in your market. Look at industrial parks. Business directories. Local chambers of commerce. Economic-development directories. Supplier networks. Manufacturing associations. You'll find companies making things you may never have realized were produced in your own community. Cabinets. Metal components. Food products. Furniture. Plastics. Signs. Machine parts. Packaging. Building products. Specialty equipment. And much more. Once you understand how to begin the manufacturing conversation, these businesses stop looking intimidating. They start looking like prospects. YOUR 30-DAY MANUFACTURING PROSPECTING PLANIdentify small manufacturers in your market. Build a list. Visit their websites. Learn what they make. Who buys it? Where is it sold? Do they describe their equipment or processes? Do they show their facility? Then begin conversations. Don't lead with: “Can I quote your insurance?” Try: “I'd like to understand what you manufacture and how your operation works.” Learn something from every conversation. Develop relationships with commercial underwriters who understand manufacturing. Learn which markets prefer which types of operations. Follow up. Ask for introductions. Build expertise one account at a time. Don't become another producer looking for a quote.Become the producer who understands what happens inside the building. WHAT COULD ONE MANUFACTURING CLIENT BE WORTH?Think beyond General Liability. A manufacturing relationship could potentially involve: • Commercial Property • Business Personal Property • General Liability • Products & Completed Operations • Equipment Breakdown • Business Income & Extra Expense • Workers' Compensation • Commercial Auto • Inland Marine • Cyber Liability • Pollution or Environmental coverage • Product Recall coverage • Umbrella or Excess Liability • Other specialized protection And manufacturers can grow. Sales increase. Equipment is added. Employees are hired. Buildings expand. Products multiply. One small manufacturing account can become a substantial long-term commercial relationship. THE ENTIRE MANUAL IS ONLY $25Buy It Once. Use It From Now On.No monthly subscription. No expensive seminar. No travel. Just practical producer development you can return to whenever a manufacturing prospect asks your agency for help. HOW TO INSURE SMALL MANUFACTURERSDigital Producer Guide $25 — One-Time Purchase Immediate Access GET HOW TO INSURE SMALL MANUFACTURERS → COULD ONE ACCOUNT PAY FOR THE MANUAL?You're investing $25 to become better prepared for the next manufacturer that asks your agency for help. One account could pay for the manual. One piece of machinery could represent many times that amount in premium. One exposure you remember to investigate could justify the investment. One better submission could help open the door to an underwriter. One manufacturer who refers another business owner could pay for it many times over. $25.One-Time Purchase.A Resource You Can Keep Using. GET THE SMALL MANUFACTURERS GUIDE → BUILD YOUR COMMERCIAL LINES LIBRARYSmall Manufacturers are only one opportunity. The FYI Express How to Insure Commercial Lines Library gives independent agents and producers practical guidance for understanding and pursuing real-world commercial accounts. Continue building your expertise with: How to Insure Contractors How to Insure Restaurants How to Insure Trucking & Transportation How to Insure Churches & Religious Organizations How to Insure Auto Repair Shops How to Insure Retail Stores How to Insure Habitational Properties How to Insure Professional Offices How to Insure Wholesalers & Distributors Don't Try to Know Everything.Learn Where to Look — and What to Ask.FYI EXPRESS Practical Training. Better Producers. Stronger Agencies. |
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