Underestimated Fire Risk
in the Food Industry in Europe
The food and beverage industry is
one of the largest sectors in the world.
The total volume of
world food exports was close to
$1.5Tin 2014
Source: The World Trade Organization (WTO), International...
Production
costs are
Profit
margins arewhileIncreasing
decreasing
Manufacturers are facing increased pressure
Faster
Production
Larger
Facilities
Just-in-Time
Delivery
New Production
Metho...
Manufacturers are facing increased pressure
New, More Diverse
and Exotic Products
Lower Prices
– to meet the expectations ...
Manufacturers are facing increased pressure
For Hygiene On Ingredient Transparency
on Packaging
– to adhere to regulatory ...
Despite the industry’s focus
on growth and innovation,
most production units have
major deficiencies or are
inadequately p...
In Germany
only 2% of food production
facilities at risk of fire
are equipped with sprinklers.
Source: The German Insuranc...
What are leading causes
of fires in
production facilities?
Human Error Working Processes Production
Facility Defects
Sometimes new hygiene regulations contradict fire protection mea...
7 24 18 18 26 31 26 34 15 34 33 29 36 34
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
12
2015
Tot...
What should insureds do?
Ensure fire resistant
separation of
hazardous facilities
(e.g. deep frying,
storage of flammable
liquids, etc.)
Divide fac...
Risk Management
Test business
continuity plans,
including alternative
production locations
Install fire
extinguishing
syst...
What are the implications
for insurers?
Equipment cannot be cleaned or repaired, in part due to regulatory requirements.
Due to the just-in-time nature of
the foo...
No possibility to outsource.
Production is halted
while rebuilding takes place.
Production alternatives
are restricted,
es...
What insurers need to
keep in mind:
As facilities become more industrialized,
and involve higher values, insurers should
regard these risks as industrial, rat...
To learn more,contact
your Gen Re
Account Executive.
© 2016 General Re Corporation | This presentation is intended to prov...
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The Impact of Trends in the Food Industry on Risk Management

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Fire is one of the biggest risks that food production facilities face today. For example, in Germany only 2% of the food production facilities considered at risk of fire are equipped with sprinklers, according to a study by the German Insurance Association (GDV). Our research shows that large losses are increasing and single claims are getting larger.

Read more here: http://www.genre.com/knowledge/blog/the-impact-of-trends-in-the-food-industry-on-risk-management-en.html

Veröffentlicht in: Wirtschaft & Finanzen
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The Impact of Trends in the Food Industry on Risk Management

  1. 1. Underestimated Fire Risk in the Food Industry in Europe
  2. 2. The food and beverage industry is one of the largest sectors in the world.
  3. 3. The total volume of world food exports was close to $1.5Tin 2014 Source: The World Trade Organization (WTO), International Trade Statistics 2014
  4. 4. Production costs are Profit margins arewhileIncreasing decreasing
  5. 5. Manufacturers are facing increased pressure Faster Production Larger Facilities Just-in-Time Delivery New Production Methods – to stay competitive
  6. 6. Manufacturers are facing increased pressure New, More Diverse and Exotic Products Lower Prices – to meet the expectations of consumers who want
  7. 7. Manufacturers are facing increased pressure For Hygiene On Ingredient Transparency on Packaging – to adhere to regulatory requirements Even well-known brands use suppliers/manufacturing facilities in countries with varying degrees of safety standards in place, leaving them vulnerable to unknown exposures and often leading to large losses.
  8. 8. Despite the industry’s focus on growth and innovation, most production units have major deficiencies or are inadequately protected against fire.
  9. 9. In Germany only 2% of food production facilities at risk of fire are equipped with sprinklers. Source: The German Insurance Association (GDV)
  10. 10. What are leading causes of fires in production facilities?
  11. 11. Human Error Working Processes Production Facility Defects Sometimes new hygiene regulations contradict fire protection measures in food production. Leading Causes of Fire
  12. 12. 7 24 18 18 26 31 26 34 15 34 33 29 36 34 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12 2015 Total Loss in Million Euro Number of Losses Average Loss in Single Claim €124.6 €283.6 €707.9 €1,159.8 €552.9 €220.2 €183.4 €533.5 €304.2 €983.9 €557.8€557.5 €459.9 €257.0 €104.6 Large losses are increasing. Single claims are getting larger. Note: Based on claims from January 2001 to September 2015 Source: Gen Re Research
  13. 13. What should insureds do?
  14. 14. Ensure fire resistant separation of hazardous facilities (e.g. deep frying, storage of flammable liquids, etc.) Divide facilities into fire compartments (e.g. production, storage, packaging) Construct buildings using non-flammable materials Fire Prevention Steps
  15. 15. Risk Management Test business continuity plans, including alternative production locations Install fire extinguishing systems in hazardous facilities Monitor the facility with an automatic fire alarm linked to the fire department Equip the facility with an automatic sprinkler system
  16. 16. What are the implications for insurers?
  17. 17. Equipment cannot be cleaned or repaired, in part due to regulatory requirements. Due to the just-in-time nature of the food industry’s supply chain, small losses cause BIs that are longer than anticipated.
  18. 18. No possibility to outsource. Production is halted while rebuilding takes place. Production alternatives are restricted, especially for businesses that require on-site production, mineral water, for example, and regional specialties such as Koelsch, Champagne, Nuernberger Rostbratwuerstchen, etc.
  19. 19. What insurers need to keep in mind:
  20. 20. As facilities become more industrialized, and involve higher values, insurers should regard these risks as industrial, rather than commercial. Industry and underwriting knowledge are essential and should include regular site visits by insurers’ risk engineers. Careful examination of wordings/special policies, as well as adjusted sub limits and total policy limits, are also critical.
  21. 21. To learn more,contact your Gen Re Account Executive. © 2016 General Re Corporation | This presentation is intended to provide background information for our clients and professional staff. It is time sensitive and may need to be revised and updated periodically. +49 221 9738 939 leo.ronken@genre.com Leo Ronken

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