Insurance for the food and beverage industry has to be shaken and stirred. It’s a niche commercial line with various evolving and highly complex exposures.
Ontario-based brokerage PBL Insurance Limited is thriving in the Canadian food and beverage insurance space. It’s PBL’s second largest and fastest growing commercial insurance program, with expert brokers keen to tackle challenges around the supply chain, public health awareness, increased governance, and so on.
Insurance Business caught up with Michael Boynton, vice president and account executive of PBL’s food, beverage and hospitality program, to find out more about emerging trends in the niche market.
Tell us about some trends in the Canadian food and beverage industry.
One of the most prominent trends and public concerns is the handling of food and beverage for health reasons. There’s an increasing desire and need for consumers to be closer to their food sources. By 2050, the world’s population is expected to reach 9.6 billion, while at the same time, the amount of farmable land is decreasing. Regulations from the FDA, and the CFIA have also developed governance practices which echo these concerns. Food and beverage manufacturers, wholesalers, and retailers now have stricter duties in the event of a product recall than ever before.
What are the biggest challenges for brokers working in this space?
It’s a highly competitive class of business with multiple carriers eager to write it. There’s an element of continuous education, which creates the challenge of understanding exposures of risk, insurance company’s intent of coverage, and the government’s role in the event of a claim. It’s important to gather feedback from the clients and the insurance companies, so that all parties meet this challenge at the same pace.
How is supply chain evolution affecting the food and beverage insurance market?
Currently, changes such as the time transport drivers are allowed on the road, costs of marine and motor transport, and scarcity of trained drivers, can all create delays. More retailers are taking control of products earlier in the supply chain and directly getting them to the shelf in stores. This strategy can help to control some of these costs. Technology will continue to play an important role in a manufacturer’s ability to evolve into a more direct approach. Autonomous transport, and transportation interfaces, are evolving to track food and beverage better, and to alleviate some of these delays.
How is strict governance impacting the food and beverage market - and its insurance needs?
Strict governance can create huge upfront capital costs which in turn create barriers to entry. As far as insurance products go, product recall coverage has made a shift from being a ‘nice’ to have to a ‘need’ to have coverage similar to general liability.
What’s the secret behind the rapid growth of PBL Insurance’s food and beverage insurance program? Do you have any tips for other brokers?
It has helped having access to products, which allow us to customize and tailor a solution from a pricing and coverage perspective.
It’s key for brokers to demonstrate the right options for clients based on the current insurance carrier’s intent of coverage. The best tip is to be an active part of an association. Support the associations, buying groups, or carriers, who support you.