With plant closures and layoffs continuing into 2010, manufacturing companies need to manage complex human resources and workers’ compensation issues to avoid increasing claim costs and a potentially significant impact on employers’ liabilities. M&A activity may lead to new risks associated with staff, new product lines, and other financial and operational risks that need to be assessed and managed. An actuarial valuation of retained liabilities can help in negotiating reductions in security reserve requirements, based on the effect that decreased sales and payroll or the increased effectiveness of loss-control programs have in lowering losses.

Looking Ahead

The property insurance market for manufacturing insureds became more competitive in the last half of 2009 as insurers’ first half push for increased rates subsided. An abundance of competing capacity, including some new carriers, in the executive liability insurance market for manufacturers has kept premium levels competitive. Manufacturers continue to focus on the financial strength of their D&O insurers and the concentration of capacity with any one insurer.