Canadian manufacturers are overhauling how they source, store and move goods in response to recent shocks – and those choices are quietly reshaping their insurance needs, according to Alexander Jeyasingham (pictured), vice president and senior underwriting manager for the Ontario and Atlantic region at Liberty Mutual Canada.
From supply chain disruption and front‑loaded inventories to the rise of third‑party haulers, Jeyasingham said insurers are watching a new set of stress points emerge in the sector.
“We’ve seen such a disruption over the past few years,” he told Insurance Business. “I think that’s led to a review of the dependency on a single supplier.”
One clear shift is a sharper focus on contingent business interruption – and the fallout if a critical supplier fails. Jeyasingham said it underlines the need for CBI cover so that when a key supplier goes down, the manufacturer doesn’t go down with it.
Geopolitics are adding another layer of uncertainty. With the CUSMA review scheduled for July and broader trade tensions in the background, manufacturers are reassessing both where they buy from and where they sell.
He also flagged growing trade uncertainty, which is pushing manufacturers to rethink where they sell. Many are diversifying beyond traditional markets, he said, with some Canadian firms eyeing Europe or shifting capacity into sectors that match government priorities such as defence – part of a broader move to “capture all available revenue streams” and retool for where the economy is heading.
At the plant level, one of the most tangible changes is the move away from pure just‑in‑time delivery and toward holding more stock on site, Jeyasingham said.
For many operations, that means bringing in more steel, packaging or other inputs earlier, particularly where a delay in one component can halt the whole line. The pattern is most evident in areas like metals, corrugated packaging and plastics, he said.
But the risk trade‑off is significant.
“From a coverage perspective, whereas before they might have had less stock or equipment in their facilities, now they have a lot more,” Jeyasingham said. “If there is a loss, making sure that they actually have the correct insurance in place is so important because they don’t want to be underinsured.”
He stressed that the trend is not universal across manufacturing. Highly perishable goods, for example, are less suited to heavy front‑loading, but in many other subsectors the shift is clear enough to warrant closer attention to declared values and limits.
Another big shift is happening in transport. Instead of running their own fleets, more manufacturers are leaning on third‑party haulers. That means giving up direct control over drivers, routes and handling, and taking on a different kind of exposure.
Jeyasingham said the risk now includes effectively “underwriting” those haulers – checking who they hire, how they operate and what cover they carry. If a contractor’s liability insurance is inadequate, he warned, losses can flow back to the manufacturer through non‑owned auto exposures.
In practice, that means probing driver standards, safety records, delivery performance and damage rates, and confirming limits and certificates rather than assuming the hauler’s policy is sufficient.
“Making sure that they do need to be asking for certificates of insurance, [and] correctly identifying the right transportation carriers to use – that’s a big trend that we’ve been seeing here in Canada,” Jeyasingham said.
Contracts are another weak point exposed by outsourcing. As manufacturers hand more critical tasks to vendors, they need a clearer view of who carries which liabilities if something goes wrong.
Without solid wording on indemnities and insurance requirements, more of the fallout from a serious loss – especially in transport – can end up back with the manufacturer. That has pushed insurers’ risk engineering teams deeper into contract and vendor discussions, looking not only at physical risk but at how clients choose and oversee their partners.
“On a lot of our risk engineering calls, we’ve gotten risk engineering involved just to say, ‘Have you checked that? Do they buy the correct liability and limits of insurance? Do you actually get certificates just to prove that?,’” he said.
