There’s been a sea change in how food businesses like yours view insurance – and how insurance brokers deal with you – in the last few years.
One piece of legislation has radically altered the way you source your insurance.
You may have noticed your insurer asking for far more information than in previous years after the Insurance Act 2015, which came into force in 2016, brought new rules into place. (Read more about the Act here: http://www.legislation.gov.uk/ukpga/2015/4/contents/enacted)
It imposed a greater duty on food manufacturers when it comes to disclosing potential risks.
One of the key points was manufacturers now have a legal duty of disclosure of relevant information about your supply chains.
This created large challenges in gathering information and presenting it to your broker.
Information which must be disclosed includes:
- All relevant details about complex supply chains – from the source to the food arriving at their factories.
- Unusual packaging or processing sites.
- How materials are transported.
- Whether neighbouring sites to the manufacturer have a high fire risk.
Brokers are now looking for details from three or four steps in the supply chain rather than just from your operations alone.
Details which might be considered relevant could range from local planning decisions to decisions about supply being made in countries like China, the USA, or South America, depending on where manufacturers source their raw materials.
How have food businesses reacted?
In many cases, senior management had to become familiar with far more of the supply chain than before the Act came into force. Before 2016, most had only become involved in disclosing details which might have a material impact on their food business.
Afterwards, senior managers had to understand far more about the process and many are now playing a more active role in risk assessment.
The Act also gives greater protection for insurance policyholders as there are now proportional claims payments, limiting total claim refusal.
So, what can you do to ensure you comply with the law?
One of the key lessons learned after the Act came into force was that food manufacturers must work closely with their insurance brokers to reveal relevant information. You need an open relationship with them.
There are no simple tick boxes now, and the new rules are complex. So, the more information brokers receive, the better protected your business will be.
Another lesson is that food manufacturers need to deal with brokers experienced in dealing with these complex rules, like Severn Bay, to ensure you get the best advice for your sector.
We understand how important hygiene, product sourcing, and microbiological testing are for the food industry.
Need insurance advice for your food industry business? Call us on 02920 470375 or find out more here.