Rates for property damage and business interruption insurance in the food and beverages sector have fallen by as much as 30% in the first quarter of 2003, according to broker Aon.
Launching a benchmarking study into insurance costs for the food and beverages industry, Aon's national broking director, Paul Maynard said insurers were now looking at each risk individually and are taking into account management ability to minimise and manage the risk.
The food and beverages industry had been hit hard by premium increases since 2000, due to a large number of claims, particularly fires involving composite panels.
The study, of 100 UK food and beverage companies with turnover ranging from £10m to £20bn, showed that, on average, premium rates increased six-fold from 2000 to 2002. The biggest increases were for companies whose processes involved heat, as well as fish and meat processors, and manufacturers of ready meals, soups, sauces and sandwiches.
Maynard said that so far, 2003 has seen rates fall by 25% to 30% for companies that have well-managed risks and which focus on fire risk reduction. He said a similar level of rate reductions was expected to continue.
"Presentation and demonstrating you have a grip on the process is all important," Maynard said. "Insurers are less obsessed about insisting on panel removal."
The study also found that risk retention levels were also beginning to fall, after the average level of retention increased four-fold between 2000 and 2002.
Maynard said that capacity for food and beverage risks was also beginning to increase. But rather than new capacity entering the market, he said the additional capacity is coming from Lloyds and the existing players.
