The nuances associated with insurance are valid concerns for California manufacturing companies. From rising property insurance costs to labor laws that tend to favor employees, it’s crucial to stay informed to mitigate risk and effectively manage their businesses.
We caught up with Chris Martz from Champion Risk & Insurance Services and Jonathan Dochterman from Dochterman Insurance about some of the challenges in today’s insurance marketplace and their advice for managing insurance needs.
Southern California’s Insurance Landscape
Rising Insurance Rates
In recent years, insurance rates in the state of California have skyrocketed, with some companies seeing their costs quadruple. The combination of frequent natural disasters such as wildfires and increased litigation has created a challenging insurance market for manufacturers.
Some insurance providers are even pulling out of the state, and others are either raising rates or offering limited coverage. This is creating serious challenges for Southern California manufacturing businesses, even though the area is more or less unaffected by catastrophic events like tornadoes and hurricanes compared to other regions.
Property Insurance Challenges
With increasing wildfire risks, many insurance carriers are hesitant to provide coverage in fire-prone areas like much of Southern California. Even manufacturers who aren’t located in high-risk zones are seeing their premiums rise. Why? Because insurance carriers are facing immense losses due to nationwide catastrophic events and they’re passing those costs onto businesses regardless of their location.
Workers’ Compensation, a Unique Challenge
California’s workers’ compensation system is another challenge for manufacturers. While competition in the workers’ comp market has kept rates stable in recent years, the state’s pro-employee legal environment has led to increased litigation. Even minor injuries can result in significant claims, and employers are often left footing the bill for long-term injuries. This has created an unpredictable workers’ comp landscape, where rates can fluctuate rapidly based on litigation trends.
Expert Advice from Champion Risk and Dochterman Insurance
Navigating these challenges can be overwhelming for manufacturers. Here’s some advice from two insurance experts on how California manufacturers can manage their insurance needs effectively.
Risk Mitigation
One of the best ways manufacturers can lower their insurance costs is by demonstrating a commitment to safety and best practices. This involves more than just purchasing insurance; it’s about creating a culture of safety and accountability in your business.
For example, by maintaining modern, safe facilities and providing consistent safety training for employees, manufacturers can not only reduce the likelihood of accidents but also present a solid case for insurers for lower rates.
Technology Solutions for Improved Operations
As technology has become integral to running a successful manufacturing business, more companies are investing in automation, ERP, and quality control solutions. These systems improve operational efficiency and reduce the likelihood of errors and accidents, which can lead to lower insurance premiums.
For instance, adopting a robust ERP system or using AI-based tools to monitor equipment can minimize downtime and prevent costly errors. As a result, manufacturers who invest in their technology solutions are more attractive to insurance carriers.
Need help determining which technologies are the right fit for your company? SoCal NTMA is happy to point you in the right direction in selecting the best solutions and using them to their full potential.
How SoCal NTMA Can Help
Navigating the California insurance landscape can be daunting for manufacturers, but SoCal NTMA offers a wealth of resources to help businesses overcome these challenges. From access to insurance and legal experts to guidance on risk mitigation and other best practices, SoCal NTMA offers members the tools to succeed in a competitive and ever-adapting marketplace.
Are you looking for ways to leverage your membership? Allow SoCal NTMA to guide you through critical issues in Southern California manufacturing, such as insurance.
Not a member yet? What are you waiting for?! Join SoCal NTMA to immerse yourself in our welcoming and knowledgeable manufacturing community.
