Manufacturers in industries that standard admitted insurance carriers decline to insure can obtain commercial property coverage through the surplus lines market, which consists of non-admitted insurers that provide coverage for risks that do not meet standard underwriting criteria.Â
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Surplus lines insurers operate under different regulatory frameworks than admitted carriers, allowing them to write coverage for higher-risk manufacturing operations, businesses with poor loss history, or industries with specialized exposures that standard carriers avoid. Each state maintains a list of eligible surplus lines insurers through the state insurance department, and coverage must be placed through licensed surplus lines brokers who are authorized to access these markets.
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Specialized manufacturing insurance programs offered by program administrators and managing general agents (MGAs) provide another avenue for hard-to-place manufacturers to obtain coverage. These programs are designed for specific manufacturing subsectors such as chemical manufacturing, explosives production, metalworking operations, or other industries with specialized risk profiles.Â
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Program carriers develop underwriting guidelines and coverage forms specifically tailored to particular manufacturing types, often providing broader coverage and more competitive pricing than surplus lines markets for their target industries. Examples include programs for food manufacturers, wood products manufacturers, and metal fabricators that address industry-specific perils and loss control requirements.
Risk Retention Groups (RRGs), authorized under the federal Liability Risk Retention Act of 1986, offer an alternative insurance mechanism for manufacturers in industries that face limited insurance availability.
RRGs are member-owned insurance companies that provide liability coverage to members engaged in similar businesses or activities.
Manufacturing-focused RRGs exist for specific industry segments and can provide general liability, products liability, and sometimes property coverage to member manufacturers. Membership in an RRG requires manufacturers to maintain specified loss control measures and participate in group purchasing of coverage, which spreads risk across all members.
State-assigned risk programs, including FAIR Plans (Fair Access to Insurance Requirements Plans), provide property insurance of last resort for manufacturers unable to obtain coverage in the voluntary market. FAIR Plans operate in approximately 30 states and provide basic property coverage, though typically at higher premiums and with more restrictive terms than voluntary market policies.
Coverage through FAIR Plans is limited to building and contents coverage for fire and other basic perils, with insureds often required to purchase separate wind, theft, and liability coverage through other mechanisms.
Working with independent insurance brokers who specialize in manufacturing risks increases access to hard-to-place markets, as these brokers maintain relationships with surplus lines carriers, program administrators, and specialty insurers that may not be accessible to manufacturers working directly with retail agents.
Brokers familiar with manufacturing operations can present risks more effectively to underwriters and may identify coverage solutions through markets that standard agents cannot access.
Manufacturers should be prepared to provide detailed information about their operations, loss control measures, safety programs, and financial stability when seeking coverage in non-standard markets.
To speak with a licensed insurance agent call (234) 231-9943 today.