Insurance premiums in the food industry have begun to fall following a peak in 2002, according to new research from insurance broker Aon.
It found that food and drink companies were seeing reductions on 2002 of between 25% and 30%, in premiums for property damage and business interruption cover.
The report says the average premium more than doubled in 2001 compared to 2000, and increased more than sixfold in 2002 compared with two years earlier. This was because insurers had reassessed uneconomical premiums, particularly in relation to highly combustible composite panels used in many manufacturing plants. So far in 2003 Aon data suggests premiums have fallen by nearly a third compared to 2002, although they are almost four times the levels reported in 2000.
Aon analysed data from a sample of 100 of its food and drink customers in the UK - including wholesalers - which had turnovers of between £10m and £20bn.
Paul Maynard, national broking director at Aon, said the drop in prices was mainly because fmcg companies had paid more attention to minimising risk.
In addition, closer partnerships with insurers and brokers led to individual risks associated with the each business being better understood, he said.
Maynard said: “Food and beverage companies have had a tough time of it over insurance costs over the past few years, because insurers have failed to differentiate between the individual businesses, and hence risk levels.” He added that he expected the downward trend would continue in 2004.
Chilled Food Association secretary general Kaarin Goodburn welcomed the news. “We have shown we are serious about best practice and insurers are taking note,” she said.
It found that food and drink companies were seeing reductions on 2002 of between 25% and 30%, in premiums for property damage and business interruption cover.
The report says the average premium more than doubled in 2001 compared to 2000, and increased more than sixfold in 2002 compared with two years earlier. This was because insurers had reassessed uneconomical premiums, particularly in relation to highly combustible composite panels used in many manufacturing plants. So far in 2003 Aon data suggests premiums have fallen by nearly a third compared to 2002, although they are almost four times the levels reported in 2000.
Aon analysed data from a sample of 100 of its food and drink customers in the UK - including wholesalers - which had turnovers of between £10m and £20bn.
Paul Maynard, national broking director at Aon, said the drop in prices was mainly because fmcg companies had paid more attention to minimising risk.
In addition, closer partnerships with insurers and brokers led to individual risks associated with the each business being better understood, he said.
Maynard said: “Food and beverage companies have had a tough time of it over insurance costs over the past few years, because insurers have failed to differentiate between the individual businesses, and hence risk levels.” He added that he expected the downward trend would continue in 2004.
Chilled Food Association secretary general Kaarin Goodburn welcomed the news. “We have shown we are serious about best practice and insurers are taking note,” she said.
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