When PayneWest commercial insurance and risk management specialists Doc Vivian and John Howard first met with a food processing equipment manufacturer, they were impressed by the sophisticated operation: state-of-the art facility and equipment, growing domestic and foreign sales, and an impressive team of 75 employees making it happen. As the PayneWest team got to know the manufacturer, they discovered that while the company was providing the highest quality product and service to their own customers, they were underserved by their previous insurer.
“Their products are the Cadillac in their industry, selling specialty equipment to medium and large companies customers across the country and in some key international markets. When we got on the scene, they were doing everything right with their operations and a lot of things right with their risk management, but on the insurance side there were some big exposures and cost savings to be found,” said Doc.
For the PayneWest team to close those exposure gaps and provide cost-saving solutions, it all started with relationship building and a thorough review of the manufacturer’s operations and coverage.
Learning the Operations
“For us it starts with a deep dive into manufacturing operations, touring, interviewing and touring again to learn our customer’s entire business and their risk tolerance,” said John.
From raw materials acquisition, custom manufacturing and quality assurance to inventory, sales and distribution, Doc and John reviewed the entire operations and supply chain. Meetings with the leadership team also provided insight into the employee and management structure, along with risk management and safety protocols.
Doc and John also performed an equipment and property valuation.
Analyzing the Risk
Once Doc and John understood the manufacturing operations and the full value of the business, they completed a coverage analysis of the manufacturer’s previous insurance plans. The coverage analysis uncovered a foreign exposure gap: if any claims had been brought from outside the U.S., their current policy specifically excluded them. The analysis also exposed an undervaluation of equipment and property and deficiencies in coverages from product and liability to umbrella and cyber. The manufacturer also lacked employment practices and management liability coverage, leaving employees and the leadership team exposed to lawsuits not protected by general liability coverage.
“We estimated that the manufacturer was underinsured by hundreds of thousands of dollars, a gap that the leadership was not comfortable continuing,” said Doc.
In an executive summary, Doc and John presented the analysis and solutions to close the coverage gaps, mitigate risk and even reduce costs. While the manufacturer was underinsured in many areas of the business, Doc and John were able to negotiate new plans with the right carriers and lower premiums.
“Because we know their business so well, we can document and demonstrate to carriers what our client is doing well to position them as a more attractive risk and potentially leading to lower premiums,” said John. “We can also provide multiple solutions, and working with the leadership, find the most cost-effective coverage that matches their comfort level with risk.”
Doc and John also brought in a PayneWest risk management specialist to provide additional safety and OSHA-compliance education for all employees.
“Today our client is 100x’s more educated about the risks in its operations and the marketplace as well as the strategies to contain them,” said Doc. “They have peace of mind knowing that they have balance-sheet protection and a nimble partner to strategically grow the company.”
Doc and John maintain semi-annual in-person meetings with the manufacturer, like all their clients, helping them keep up with changes in the business, discuss hurdles and shifts in the regulatory environment and markets, and provide proactive coverage and risk solutions.
Doc Vivian and John Howard’s hands-on approach comes from decades of experience working with manufacturing businesses throughout the Northwest — with deep understanding of the manufacturing supply chain and risks with both domestic and international markets.