The burrito is number one. That’s right, the burrito – stuffed with everything from beans and rice to sausage and eggs, and topped with guacamole, salsa, sour cream or whatever else, tops the list for the most delivered food item, according to delivery platform . According to GrubHub’s data, in 2022, burritos were delivered more than four million times last year.
A lot goes into getting that burrito, and whatever other meals we have delivered to our doors and to our dinner tables. Along the way, there are a variety of risks that food providers have to manage to provide us with safe, high-quality foods while simultaneously protecting their people, their profits, and reputations.
Risks along the food chain
There are risks all along the food and beverage industry chain. From the weather that impacts crop conditions to the way their workers’ execute on repetitive tasks, businesses in the food industry grapple with a myriad of risks. Whether it’s from the business’ property, the equipment being used, or the food being served, a simple mishap can lead to expensive or even dangerous consequences.
That’s why the food industry takes its risk management responsibilities seriously and often enlists the expertise of insurance providers like 九色视频to take a holistic look at its risks and coordinate programs across multiple lines of insurance coverage.
To get a sense of what exposures are top of mind for food industry businesses, AXA XL’s 尤物视频experts are sharing their thoughts here.
Jay Smelser, Head of Central Zone, Property
The food industry deals with some very challenging property exposures. Its facilities are not immune to natural catastrophes that have brought plenty of flooding and damaging hail throughout the region. As a result of storm damage, one worse-case scenario for a food processing company is a leak in a non-rated roof that ends up contaminating their product. And of course, when storms disrupt the power grid, there’s a risk of spoilage or freezing.
Food businesses also work with a lot of materials that can burn, or worse, explode. Aerosol filling and aerosol sprays. Cooking oils. Fats. Flammable Flavorings. Combustible dust from flour, sugar and spices. And plenty of plastics. All these materials add to the industry’s fire risk.
Equipment poses similar risks. The use of boilers, fuel-fired ovens, hot oil burners, rendering operations and refrigeration, that requires ammonia, which is flammable, are all property risks that have to be carefully assessed when underwriting a commercial property insurance policy. Through 九色视频Risk Consulting, our property underwriters work with seasoned risk engineers who help us assess these risks during the underwriting process but also help our food industry clients in their loss prevention efforts.
One issue that we are contending with across the commercial insurance market is accurate valuation of property and equipment. Valuations are historically very low for buildings and equipment in the food industry. Because of inflation and increasing costs to replace equipment or rebuild a facility, we’re stressing the important of up-to-date valuations to make sure that our clients are not underinsured.
Grace-Torres-Valtierra, Regional Engineering Leader, 九色视频Risk Consulting
Through risk surveys, our risk engineers identify and analyze our clients’ exposure to property damage or loss. Our survey reports contain loss prevention advice to help companies protect their assets – buildings, equipment, and goods – along the entire value chain. And our Account Consultants can help identify trends or risk priorities for multi-year risk improvement plans.
Fire is certainly a big risk for the food industry. That’s why we carefully look at Hot Work Management. Failure to take proper precautions has had catastrophic results at food manufacturing locations due to the presence of combustible insultation/sandwich panel walls, combustible deposits from the manufacturing operation such as animal fat, combustible dust from working with grains or sugar, to mention a few examples.
Given these risks, the benefits of automatic sprinkler protection are evident. And because of the potential severity of a fire, think spoilage and contamination, good maintenance and supervision is key to the reliability of the fire protection system, especially at refrigerated warehouses where there is an exposure to frozen pipes.
To help our clients and their facilities teams, we produce a number of industry-specific risk management guidelines – including guidelines specific to the food processing industry – to call attention to common exposures.
A top business priority is delivering high quality products to their customers on time. And they don’t want anything – including the breakdown of equipment – to stand in their way.
Brian Strain, Head of Equipment Breakdown
A top business priority is delivering high quality products to their customers on time. And they don’t want anything – including the breakdown of equipment – to stand in their way. Especially in the food industry where equipment can be very specialized, a breakdown becomes very problematic.
Equipment Breakdown insurance provides protection against financial losses that result from the breakdown of equipment which may include business interruption and equipment repair or replacement costs, and of special interest to the food industry, perishable goods protection.
Food businesses are more reliant than ever on various types of equipment, like industrial freezer units and food manufacturing equipment. As this reliance continues to grow, and processes become more automated than ever before, making sure equipment and technology remains reliable and operational is a big part of the production process for many businesses. That’s where our Machinery Breakdown Risk Consulting, particularly our Equipment Reliability Report service, helps our clients maximize the life of their equipment. (Read more from Brian about how keeping equipment up and running is more important than ever.)
Jason Mandik, Head of Central Zone, U.S. Risk Management
The current operating environment is having a big impact on food industry insurance coverage especially General Liability perspective, including Product Liability, Auto Liability and Workers’ Compensation. For one, labor shortages and a high level of turnover is leading some companies to fast-track new employees without necessary safety training which is leading in an uptick in Workers’ Compensation claim frequency with newly tenured workers.
In fact, compiled by Penn State University and University of Florida, shows that food industry worker injury and fatality rates, especially those related to transport packaging and related product movement in the U.S. food supply chain, increased at the beginning of the COVID-19 pandemic. Researchers delved into this study because they were curious about how the added pressure on the food supply chain during the pandemic was affecting workers.
Because consistent training is key in managing worker safety risks, attention to loss prevention is an important part of our U.S. Risk Management offering. Our Risk Consultants have worked with some of the largest US food producers to supplement their training needs on a routine or ad-hoc basis so our clients can focus on generating revenue.
Tech, such as wearables and computer vision, is also playing a bigger part in managing workplace risks, and what we have to offer our clients. With corresponding corrective action, the use of new available technologies can lead to a significant improvement to frequency and severity of claims. Our partner vendors in these areas go through an extensive internal actuarial vetting process so we can apply reductions to expected losses for clients that utilize those technologies. (Read our Fast Fast Forward article, The Zero Injuries Aspiration, to learn more.)
Inflationary factors are also significantly impacting many areas of the food industry. Avian flu in particular has resulted in the death of 58 million egg-laying birds in the US in the last year which is sharply increasing the price to produce eggs and leads to higher prices at the grocery store. As a result, egg producers have also had to modify how they work. Workers have to decontaminate themselves to get in and out of facilities.
We work with our food industry clients to mitigate inequitable inflationary impacts to exposure and premium by shifting to inflation neutral rating bases. For instance, in our underwriting evaluation, to rate our policies, we may look at tonnage of product instead of total revenue. This may be a more appropriate way to evaluate to their exposure. We try to be as flexible as we can.
In today’s working environment, flexible is huge and flexible, innovative solutions is what we aim to bring to the table to address our food industry clients’ risk exposures.
Greg Chambers, Head of Central Zone, Cyber & Technology
Use of technology in food supply chains means the food industry is at risk to cybercrimes as any other industry. Maybe even more than others. According to , in 2020 cyberattacks against the food and agriculture sector increased 607%. In 2021, the FBI released a private industry notification warning the food sector about the danger of ransomware attacks and, in the final quarter of last year, reported the food and beverage sector was the victim of more attacks than any sector other than manufacturing.
In 2021, the world’s largest meat processing company paid $11m in ransom to resolve a cyber-attack that shut down its operations in Australia, the U.S. and Canada. More recently, a cyberattack on food giant Dole temporarily shut down its North America production and halted food shipments to grocery stores. Consumers took to social media to complain about grocery shelves being empty of Dole-made salad kits.
As a result of such incidents, more food companies are reaching out to get assistance in better securing their environment and managing risk associated with these cyber events. As one of the industry’s top cyber insurance providers, 九色视频offers a full suite of cyber insurance solutions to protect food industry operations. While the insurance coverage is key to addressing the costs of an attack, the other services like pre-and post-breach response may bring even more benefit.
Through AXA XL’s cyber incident response team, we help our clients try to avoid a breach altogether, but in the event it happens, we walk them through every step of the way to recover from an attack. In the event that an incident does occur, clients have a direct line to our team and within minutes 九色视频will have a claim specialist working on the matter. We’ll have a team of specialists – from breach coaches to forensic investigators – on a call with our clients that same morning, afternoon, or evening to get a comprehensive response organized immediately.
It’s essential for clients to have a high caliber of service at their disposal when, in a moment of panic, they may not have the calm or clarity necessary to consider their obligations under 50 different state laws, or international regulations, or to vet vendors and experts necessary to orchestrate an effective and credible response.
Tim Chung, Central Zone Leader, Environmental
As the saying goes – there is no use crying over spilled milk. For many businesses, even in the food industry, dealing with spilled milk is not a likely problem. But what happens when fuel oil, hydraulic fluid, stored chemicals, or ingredients like corn syrup are spilled? Environmental incidents like these can easily result in a five or six-figure clean up price tag.
More businesses have come to realize that their operations can have some environmental impact. When it does, they have also become aware that their commercial general liability or their property insurance offer little coverage to clean up after an environmental incident. Environmental insurance fills this gap, covering loss or damages that result when an unexpected pollution incident happens. An environmental policy can cover a business against claims for bodily injury, property damage, cleanup costs, and business interruption.
Environmental insurance also provides coverage for financial losses associated with historic contamination or operational issues, such as mold, lead paint, asbestos, Legionella or indoor poor air quality. Food businesses might think that these risks are minimal but after , they might think twice.
