Manufacturers are undermining their ability to grow by neglecting risk management while insurance for the sector remains unfit for purpose, according to research from insurance governance firm Mactavish.
Inadequate risk governance on the part of manufacturers, increasing insurance claim disputes and the failure of brokers and insurers to provide fit-for-purpose protection to their clients are highlighted in the Mactavish report.
These problems are seen as ‘blind spots’ which could cause individual companies to fail. Mactavish claims that one or two high profile cases of delayed or withheld insurance payments could debilitate manufacturing confidence.
The report states that: “The current assumption that insurance will simply respond when needed is inconsistent with the legal reality.”
The trend for increasing servitisation in manufacturing firms is pinpointed as one reason why exisitng insurance structures have become inappropriate for manufacturing, says the report. This is due to the addition of risks previously unaccounted for.
The report warns that, “most manufacturing businesses today remain needlessly exposed by addressable weaknesses in the insurance system, but usually do not find out until it is too late.”
Mactavish advises manufacturing boards to revisit their insurance policies and the report provides practical steps which can be taken to reduce risk.
Bruce Hepburn, CEO of Mactavish said:“The whole mechanism of corporate governance today neglects to recognise insurance failure as a large and increasing threat, with manufacturers facing especially dire concern as a result of its high rate of adaptation to current economic reality.”
Mr Hepburn conitued to say the legal reform is overdue but that the law alone will not solve problems of complacency and bad practice from manufacturing leaders when it comes to risk management.
For more information go to: www.mactavishgroup.com.
