How does consumer stockpiling affect your insurance?
By Mick O’Bree,
GM – Operations for Ausure Insurance Brokers
In 2020, as Covid lockdowns hit, people from around the world panicked and bought up unusually large supplies of goods for their homes. This created a dynamic change to supply and demand for Australian businesses, and across the world.
So how has this affected Australian businesses?
It made it harder and potentially more expensive for businesses to make and supply their goods to Australians. Think back (not too far, unfortunately) to the empty toilet paper aisles last year. The stock did not disappear, it was just stockpiled by some and made unavailable for others.
The same principle is happening now for companies across Australia, and the world. A shortage of stock availability can leave Australian businesses with some significant issues. This can have a knock-on effect on how their insurance policy will respond.
How can a shortage of stock availability have a knock-on effect on your insurance policy?
Some companies are buying as much stock as they can get their hands on, even at a much higher cost and stockpiling it. If their insurance policy is not updated, they will be exposed.
It can also lead companies to “pivot” or adapt to change by reviewing their suppliers and possibly changing or adding business activities to survive. Manufacturers and importers are at the forefront of this.
Would you like an example of stock availability? Some trucking companies in Australia cannot keep up with building new trucks, due to a shortage of key components, like semiconductors.
Would you like an example of adapting? An easy example we are all aware of is that nearly every business has adapted to working from home options. A more specific example: Gin Manufacturers, who pivoted their operations to make hand sanitisers. Imagine if a client sued the Gin Manufacturer, due to an injury from the hand sanitiser and the insurance policy only covered “Gin Manufacturing” activities?
So, how does this affect insurance?
For most businesses, their levels of Stock and Contents would have changed in 2020. Depending on your industry, even if it is just buying more equipment for employees to work or varying levels of stock, this could affect your insurance.
Speak to your trusted Ausure insurance adviser, who will help ensure your levels of insurance are correct for your situation.
What do Manufacturers or Importers need to know?
If you are a manufacturer or an importer, you may need to review where you import stock from. By Australian law, if you import goods, you are deemed the manufacturer, for more information on this you can view the Australian Consumer Law website. So, your Public Liability policy needs to:
1) be set up correctly to cover manufacturing activities and
2) your insurer needs a clear understanding of the products you manufacture, where the parts come from, and your quality assurance plan.
Whatever your industry or situation, speak to your trusted Ausure insurance adviser who will help protect you and your business. Fill out the form below, or click here to find your closest broker.
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