As published in Insurance Journal
As these and other companies expand the scope of their businesses and assume new risks, there are increasing opportunities for independent agents to counsel manufacturing clients and help develop insurance programs that address evolving risk profiles. However, the nature of the wide variety of risks can put agencies in a challenging space. As manufacturers expand their businesses, they require a variety of coverages to provide the right solutions — and this often requires that independent agents leverage products from multiple carriers to piece together a robust solution.
Unfortunately, this strategy also can result in coverage gaps that potentially lead to uninsured claims events and also can present errors and omissions risks for agencies, on top of administrative inconvenience for the customer. The good news is that often times independent agents can find a single carrier that can provide the range of coverages needed – providing broad and comprehensive coverage for their clients.
Four risks to consider
- Expertise: A manufacturer must possess the right knowledge, expertise and resources to produce the product. Without this, the manufacturer is opening the business up to potential claims or lawsuits.
- Regulations: A manufacturer must adhere to regulations that impact the production or sale of the new products. Failure to do so could result in legal or regulatory actions taken against the manufacturer.
- Intellectual property: If the manufacturer does not own the intellectual property for the product and seeks to use another company’s intellectual property right, they must ensure they obtain appropriate permission and licensing approvals to use that intellectual property right. Failure to do so could result in expensive litigation and financial damages to the manufacturer.
- Products: It is important insurance programs include broad definitions for clients’ “products” and “work,” and do not include exclusions that would prohibit coverage for potential claims or lawsuits.
The role of independent agents
It’s critical to understand the clients’ business models, customer bases and processes as agents assess risk and build insurance solutions that work effectively. Ensuring a risk is appropriately covered under products liability and professional liability coverages (E&O, cyber, etc.) helps independent agents identify possible gaps in protection. It is important to avoid situations where an organization is missing a key coverage due to the insertion of an exclusion or the omission of a particular coverage.
In addition, the more comprehensive the insurance plan, the fewer chances for coverage gaps. When building insurance plans, independent agents may access multiple markets to assemble a plan that works for a client. They may seek cyber from one carrier, professional liability from another and product liability from a third carrier. As agents know, there are several benefits to providing coverage through a single carrier. We see the most successful independent agents in this space guiding clients toward a single carrier that has a deep understanding of their unique risks. As a result, the customer benefits from a more seamless customer experience and the agent increases customer retention.
As the development of blended risk manufacturing continues to evolve, agencies can help technology and life sciences clients avoid coverage gaps, address their unique needs with flexible coverage and limit options, and partner with experienced carriers that offer customizable, cohesive coverage solutions under a single policy. With an understanding of the intricacies of the market, independent agents are well positioned to help their clients protect their businesses from losses.
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About the author
Mina S. Rona is The Hanover’s vice president and chief underwriting officer of technology and life sciences, where she manages all aspects of the company’s life sciences operations, as well as product innovation and underwriting strategies for technology.