Insurance crisis reaches processors (October 03, 2002)
Canadian PlasticsCanadian Plastics
One of the repercussions from the terrorist acts of Sept. 11, 2001 is higher insurance premiums for plastic process...
One of the repercussions from the terrorist acts of Sept. 11, 2001 is higher insurance premiums for plastic processors. The average increase for plastics companies was 35% in 2002 and will likely be similar in 2003, reports
Tim deGroot, a plastics specialist within the insurance industry.
In addition to being more costly, commercial insurance for plastics processing facilities is harder to find.
Hawk Plastics of Windsor, ON, enlisted three brokers who approached about twenty insurance providers, and found only one that would take on the policy. "They’re throwing up excuses like the events of 9/11," says Bob Jaques, controller.
Unlikely as it seems, it’s not an excuse. Sept. 11th "literally crippled the insurance industry," explains deGroot, program engineer for insurance broker PlasticsProtect. "Globally, there’s little re-insurance available and the capacity of some providers is small. So, Hawk Plastics’ situation is not unique at all."
However, Hawk Plastics did have two strikes against it. "Our building didn’t have sprinklers, and we sell products to the U.S., which exposes us to a much higher liability risk," says Jaques.
DeGroot concurs. "In these market conditions, without an NFPA-approved sprinkler system suitable for a plastics plant, you’ll find it next-to-impossible to find insurance."
In addition, the plastics industry is not a target market for many insurers. "There are only about four insurers that are interested in Canada and that have the capacity to write for the plastics industry," says deGroot.