Aerospace and Defence Insurance Overview 2013
Insurance isn t all bad At Noyce Insurance Solutions we specialise in supporting engineering and manufacturing businesses in getting the right protection at the right price. The insurance industry has many quirks, one of which is that it is a product that is not immediately recognisable until it is needed. It is at that point that you want to make sure you have the best product available. This means that it is a commodity that is very dependent on the skills and knowledge of the Insurance Broker who assesses your business, and provides you with the insurance quotations. As an industry we play a very important role in society, as by our actions it allows: Planes to fly Cars to be driven Buildings to be built Staff to be taken on Pay-outs from insurance has allowed: - Rebuild Lower Manhattan following 9/11 Rebuild New Orleans following Hurricane Katrina Recovery of economies following Earthquakes in Chile, Japan and New Zealand Rebuilt homes and businesses after the UK floods in 2009 and 2012
Changes in Legislation Legislation is constantly changing and unfortunately a lot of the changes often seem to have a negative impact on businesses and business owners. A good example of this is the Corporate Manslaughter and Corporate Homicide Act 2007 which is a landmark in law, whereby for the first time, companies and organisations can be found guilty of corporate manslaughter as a result of serious management failures, resulting in a gross breach of a duty of care. Noyce Insurance Solutions are committed to keeping their clients aware of the relevant changes in legislation which affects them from an insurance perspective and advising them on the action they should consider undertaking.
Insurers and Claims Insurance companies are increasingly being placed under pressure from shareholders and management to only pay claims if they have to. This has led to insurers becoming far more stringent when considering claims, and the days of ex-gratia payments are now disappearing. Your insurance broker plays a key role in negotiating your claims. One major change has been insurers relying more on Warranties and Conditions on policies, and refusing to pay claims due to non-compliance. Warranties are imposed by insurers and are fundamental conditions which if not absolutely complied with, will allow the insurer to repudiate a claim or even null and void a policy. At Noyce Insurance, we communicate these issues to avoid those traps and have a dedicated claims advisor to maximise the chances of your claims being paid.
Correct Insurance Protection All businesses have a duty to disclose all relevant information to an insurer but in practice this very much relies on the skill and knowledge of your insurance broker. It is their job to identify material facts and provide a detailed report to the insurers. Your insurance broker should explain and cover the following: - What a warranty is and the implications of failing to comply with it Understanding Business Interruption and Indemnity Periods Claims notification requirements and conditions The warning about financial history and claims history The effect of not complying with the conditions
The Supply Chain Many Companies involved in manufacturing parts and products for the Aviation Industry believe that they are protected by their position in the supply chain but this is not always true. Litigation has arisen in a number of key areas. For example, following failure in parts supplied for Chinook helicopters, lawyers looked to include as many parties in law suits as possible. It may not be your fault, but do you have the spare reserves to investigate and defend your position, which could easily run into several tens of thousands of pounds in the early stages. This can be covered via the correct insurance protection. Whilst the claim is usually made against an OEM initially, responsibility for an incident in litigation can often cascade down through the supply chain. Quality control procedures can support your case but may not provide the protection needed from litigation. The assessment of this needs a high level of skill to both understand your business and your customer contracts. Next generation contracts are passing more risk down the supply chain and thus increasing the need for aviation insurance within the supply chain.
What Cover Each business is different so Engineering and Manufacturing companies need to be protected not only against the normal business risks, but also to include those that are specific to their individual trade and sector. Below is a brief overview of the types of insurance that a typical engineering or manufacturing client would require from us: - Combined Commercial Insurance including 1. Material Damage 2. Business Interruption 3. Employers Liability 4. Public Liability 5. Product Liability (if they have their own products) 6. Goods in transit 7. Engineering insurance Aviation Product Liability Insurance including grounding of aircraft (This cover is automatically excluded from standard Public Liability/Products Liability policies, and must be purchased separately/in addition) Directors and Officers Insurance incorporating Corporate Liability Employment Practices liability Marine cargo Motor/ motor fleet Other risk to consider might be 1. Professional Indemnity 2. Environmental Impairment liability 3. Cyber Risks Liability
What can happen? Below are just a few of the recent claims made against insurance companies in the aerospace sector. This is just to give you an idea of when your insurance would step in to protect you. Runway Incursion Cause of Incident: Runway incursion Liability rests with: Service providers Loss to Aerospace insurers: $131,750,000 Forecast: Increase in risk due to increased movements Runway Debris Cause of Incident: Runway debris puncturing fuel tank Liability rests with: Prime Manufacturers Loss to Aerospace insurers: $66,000,000 Forecast: Risk passing down supply chain Glass Beads Cause of Incident: Ingestion of glass beads from runway Liability rests with: Airport authority Loss to Aerospace insurers: $53,000,000 Forecast: Low risk due to product development Wiring Fault Cause of Incident: Wiring fault Liability rests with: Airframe manufacturer Loss to Aerospace insurers: $441,735,000 Forecast: Risk passing down supply chain
Free Insurance Review As part of our partnership with the FAC we offer all members a free comprehensive insurance review. We visit your business to assess your individual insurance requirements, look at what is in place currently and take you through a step by step process that will protect your business at the right price. As we specialise in the aerospace and defence sector, we can give you up to date information and advice on how similar businesses reduce their risk and exposure. We will be able to analyse every part of your business and assess what cover you need and where. After the process, one of the team will present a report which will help review your existing arrangements. This will enable you to identify the areas or risks that are currently unprotected, where action should be taken, and which covers are available and their costs. To book a free review please call the team on 023 8062 2190 or email enquire@noyceinsurance.co.uk
Testimonials We have helped a number of FAC members in the past few months with their insurance programmes. Below are a number of testimonials: - Long and Marshall is a business with 40 years of delivering manufacturing excellence and are renowned for our high quality components. When we looked for an insurance partner, Noyce Insurance stood out with their experience within Aerospace and attention to detail to handle the technical side of our business. Tony George General Manager At Proptech we are largest Aircraft Propeller Repair & Overhaul business in the UK and thus we look after complex, high value components for our customers. Managing the risk within our business is vital and Noyce Insurance provides us the comprehensive insurance support we need to both protect our business and our customer s products. Andrew Featherstonhaugh Managing Director JNDC is a design consultancy within the aerospace and defence sector. Our clients use us to solve some of their most critical design challenges and bring new products to market. This requires having an insurance partner that can both understand the complexity of our business as well as the impact of the products we are designing. Noyce Insurance provides us the protection for our business, products and customers need. Jan Niklewicz Director
Who are Noyce? Noyce Insurance Solutions is an independent insurance broker that helps our clients reduce the cost and time of insurance by using our extensive knowledge and one to one meetings to protect your business. We work in partnership with you to understand your business and provide the right cover at the right price. We have access to the relevant specialist insurance markets, including Lloyd s, to save you time and increase the quality of your insurance. We are focused on helping your business achieve its goals and reduce the risks in achieving success. Tel : 023 8062 2190 Email : enquire@noyceinsurance.co.uk Web : www.noyceinsurance.co.uk