Re-setting limits in industrial insurance
Just a few years ago, it was common for companies to have property insurance limits that comfortably covered their entire production hall, technology, and business interruption. Today? For the same price, they get lower coverage, higher deductibles, and more exclusions. What has changed – and how should we react? Industrial insurance is undergoing a significant transformation. The combination of climate change, high inflation, geopolitical uncertainty, and limited reinsurance capacity means that insurers are approaching limit setting much more cautiously than before.
The end of insurance certainties?
Industrial insurance is undergoing a significant transformation. The combination of climate change, high inflation, geopolitical uncertainty, and limited reinsurance capacity means that insurers are approaching limit setting much more cautiously than before.
Many companies are thus finding that:
- the insurer is offering a lower coverage limit than last year,
- while also demanding a higher deductible,
- and adding exclusions it never mentioned before.
What's changing?
1. Lower limits for catastrophic risks
Insurers are significantly reducing limits for damages caused by natural disasters (flood, storm, fire) because the risk of aggregated losses is growing. This also applies to clients with a claims-free history.
2. Higher deductibles
Smaller damages that were previously covered by insurance now come out of the insured's budget. Deductibles in the millions of Czech crowns are not uncommon.
3. Limited capacity for high-risk industries
Insurers are limiting their capacity, especially for energy, chemical industry, and automotive – sectors considered high-risk.
4. Emphasis on data quality and prevention
Insurers require detailed information: audits, technical documentation, and prevention plans. Those who don't provide them face worse terms – or won't receive an offer at all.
5. Necessity to update asset values
Inflation and rising construction costs increase the risk of underinsurance. Those with insured amounts from 2018 may receive significantly lower payouts in the event of a claim.
A real-world scenario from Czech practice
A manufacturing company in the Moravian-Silesian Region, 150 employees, custom metal production:
- 2021: payout limit CZK 500 million, deductible CZK 500 thousand, standard terms
- 2024: limit CZK 300 million, deductible CZK 5 million, exclusion for machinery older than 10 years, limited business interruption coverage
Additionally, the insurer requires investments in fire alarm systems and an update of asset values.
What to do?
1. Build internal risk management
Don't approach insurance as merely purchasing a service. Approach it as strategic risk management.
2. Work with layers of coverage
You can achieve higher limits through "layering" – a combination of primary and excess coverage.
3. Consider alternatives
Captive solutions or parametric insurance (e.g., for floods) may be suitable for specific risks.
4. Regularly appraise assets
Accurate insured values are crucial to prevent the company from unnecessarily losing millions in the event of a claim.
5. Have a strong partner by your side
An experienced broker today is not just an intermediary – but a key negotiator, analyst, and guide in a changing environment.
Insurance as a living organism
An insurance policy is no longer a static document set for a year. It's a tool that must respond to changes in your business and in the insurance market.
If you want your insurance to truly have your back, simply paying the premium isn't enough. You need to work with it – thoughtfully, strategically, and with expert guidance.
At Eurovalley, we'd be happy to help you with that.
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Effective insurance starts with understanding risks. We help clients identify, assess, and manage risks so that their insurance strategy aligns with their real-world operations and long-term vision. Our insurance consulting connects detailed analysis with executive-level decision-making processes.
