Many of our agents represent manufacturers & distributors, and like most industries, accountability for business practices has recently become a bigger issue in this market. In addition to seeing interesting trends universally, we are also learning about specific sectors of the industry that are impacted by new regulations, changes in carrier appetite, and rate changes.

Earlier this month the Senate passed legislation that will overhaul the way the federal government regulates chemicals sold in the U.S. According the The Washington Post, “The overhaul will allow the EPA to order companies to test their new products. The measure will also create a more uniform regulatory system for chemical manufacturers.” While the bill has been criticized as “too weak” by certain environmental groups, this new regulation is being welcomed by many manufacturers because it will give them more straightforward guidelines and help them avoid navigating unclear rules. Any change like this can have an effect on a company’s insurance needs, as well as their appeal to an insurance provider.

When looking at general issues we’ve seen when writing manufacturer & distributor accounts, manufacturers producing soaps, sanitizers, and chemicals have become more challenging for us to place because of an uptick in skin/eye irritation bodily injury claims. The transportation exposures relating to manufacturing and distributing products have also come to the forefront. We recently wrote coverage for a railroad tie manufacturer specializing in weatherproofing chemicals used in making the ties. The railroad was requiring insurance for the loading/unloading and transportation, creosote chemicals, etc.

Another point that has come up recently is the discussion of insurance for products manufactured in foreign countries. If a product being sold in the U.S. is produced in an overseas manufacturing facility (as many of them are), covering foreign facilities for environmental exposures could be an issue. Distributors also have product exposures, especially when selling products made in other countries.

Other trends we’ve seen recently for manufactures & distributors:

• Although more markets are getting into writing facility business, fewer markets are willing to offer pre-existing coverage. We have had in influx of markets willing to write the GL/PL/CPL/EIL/Excess and Auto on this type of business in the last 18 months. The issue is that they are not as interested in the historical pollution exposure.
• Some Excess markets are reducing the limits they will offer. The market appears to be softening somewhat, so carriers have had to reduce the limits they are willing to put out so that they do not find themselves with the potential for a “high limits loss” with a severe underpriced premium.
• GL rates have become extremely competitive. With the number of carriers writing industrial/environmental accounts and the current softening market, more carriers are competing for this business.
• Auto rates have started to firm up. A trend over the last several years is that auto continues to be the loss leader. Auto can be very difficult to place depending on the makeup of the fleet and its existing loss history. Carriers have sustained so many losses on auto lines that they are unwilling to cut rates anymore.

Despite these challenges, we are seeing a tremendous opportunity for manufacturer and distributor accounts and writing a lot of them. Many of our carrier partners welcome this type of business and are competitive with most insurance lines relating to this industry: Products Pollution Liability, Premises Pollution Liability, Transportation Pollution Liability, Non-Owned Disposal Site Coverage, GL, and Contractors Pollution Liability.

For more information or to discuss the insurance marketplace as it relates to manufacturers & distributors, please contact us.