2012 Property renewals for tech companies: start early
Technology companies that have owned manufacturing operations or outsource their manufacturing to suppliers in Asia should get an early start on their 2012 Property Insurance Renewals. Outside of the insurance realm, companies should seek diversification in their supply chain whenever possible to help mitigate a concentration of risk in catastrophic prone countries.
The credit rating firm, Fitch Ratings, said in a new report that the “reinsurance industry will most likely try to raise catastrophe premiums across the world to try to absorb the steep losses from natural disasters in the Asia-Pacific region.” This will impact technology companies who rely on outsourced Asian manufacturing locations and purchase Property and Business Interruption coverages in order to protect their supply chain.
A summary of the Fitch report in The Wall Street Journal stated that, “the flooding in Thailand has affected companies across the technology sector in particular, hurting worldwide hard-disk drive manufacturing. Thailand is the world’s second-biggest hard-disk drive manufacturer.”
Fitch also stated that “price increases thus far have been mainly focused on the countries that have been affected by natural disasters, noting U.S. casualty prices remained flat in the June and July [reinsurance treaty] renewal seasons, while New Zealand prices doubled and Japanese rates increased by 30% to 70%.”
About the Author
Ed Flanagan is a Senior Vice President in the Property & Casualty group and leader of the High Technology practice at WGA. His responsibilities consist of negotiating complex insurance programs with a variety of clients ranging from venute-backed startup technology companies to publicly traded multinationals.