Canadian manufacturers are racing to automate, decarbonise and digitise their operations – and in the process creating a new set of underwriting questions for insurers, according to Alexander Jeyasingham (pictured), vice president and senior underwriting manager for the Ontario and Atlantic region at Liberty Mutual Canada.
From robotics and lithium‑ion batteries to cyber‑exposed production lines and fast‑evolving “green” offerings, he said the risk profile of a typical plant looks very different than it did even a decade ago.
“It’s such an interesting market right now,” Jeyasingham told Insurance Business. “We’re seeing automation and robotics really changing loss profiles.”
Labour shortages and reshoring are driving a wave of automation across Canadian factories as firms try to maintain output with fewer skilled workers. That is changing both the nature and concentration of risk.
Automation can take people out of some of the most dangerous tasks, but it creates new dependencies on specialised equipment, control systems and power. Failures can be more complex and expensive, and downtime harder to recover from.
A key concern is the growing use of lithium‑ion batteries in mobile equipment, robots and backup systems, which bring distinct fire and suppression challenges. “Because of all this new addition to robotics, lithium‑ion batteries are actually becoming an interesting emerging risk in the workforce,” Jeyasingham said.
Those trends are forcing manufacturers and insurers to pay closer attention to how new facilities are designed and retrofitted, with risk engineers increasingly involved early to scrutinise sprinkler design, storage heights and layout before equipment goes in.
The drive for efficiency is also tightening the links between IT and operational technology on the factory floor. Connected sensors, remote monitoring and automated control systems are now standard in many Canadian plants, helping improve quality, throughput and maintenance – but also widening the cyber attack surface and increasing the risk that an incident shuts down physical production, not just office systems.
That makes cyber insurance and basic controls – such as multi‑factor authentication and network segmentation – a core operational concern rather than just an IT issue. “Purchasing cyber insurance and being aware of multi‑factor authentication, just different things to prevent a loss, is also very important going forward,” Jeyasingham said.
People remain as central to the risk picture as technology. Many manufacturers are struggling to replace experienced workers who hold critical institutional knowledge about processes, equipment and informal workarounds that were never written down.
That loss can ripple through safety, maintenance and incident response, especially in more complex, automated plants with fewer seasoned operators to spot early warning signs. “We find a lot of skilled labour shortage… with that there comes a loss of institutional knowledge,” Jeyasingham said.
For insurers, that is bringing questions about training, onboarding, documented procedures and succession planning to the forefront of underwriting discussions – not only for liability, but for property and business interruption exposures as well.
Beyond operational change, many manufacturers are retooling to hit decarbonisation and circular‑economy targets, experimenting with new materials, processes and “greener” product lines.
That shift is being driven by rising demand for low‑impact products but is also creating uncertainty, as many of these formulations and technologies have limited real‑world loss histories and sit at the intersection of marketing, sustainability and performance.
Insurers are paying close attention to how far environmental and performance claims can be backed up, and how precisely they are worded. Broad assertions about recyclability, carbon impact or other ESG features can create liability if they are later challenged.
“We definitely look at the claims that companies make just to make sure that they’re not making claims that maybe they can’t substantiate or that might be too broad,” Jeyasingham said.
Against that backdrop, the manufacturers who tend to fare best with insurers have a few things in common: they are open with information, think in prevention rather than reaction, and follow through on advice.
“The transparency, the early engagement, the partnership is so key,” Jeyasingham said, noting that flagging operational changes or expansions early gives underwriters and risk engineers a chance to shape coverage and controls before risks are locked in.
Treating the insurer as a technical partner rather than a commodity buyer is part of that, as is building a genuine loss‑prevention culture – from preventative maintenance and sprinkler impairment testing to robust training and procedures.
Data quality and claims readiness also matter. Up‑to‑date values, realistic business interruption calculations and clear escalation and continuity plans can determine whether a major incident is survivable or crippling.
For underwriters, one simple marker stands out: whether clients act on the feedback they receive. “Acting on risk engineering recommendations, not just receiving them, is critical,” Jeyasingham said.
