NIBA / Special Feature
The manufacturing sector contributes around 5.6% of GDP, $108 billion in value added, 22% of exports, 7% of the workforce, and 6% of corporate tax in Australia. And, given the sums of money involved and the breadth of manufacturing as a whole, it’s an area that’s seeing constant change. New technology, cyber threats, and emerging product lines are just three factors driving change and creating new risks – and, in turn, creating significant opportunities for brokers to add true value. First things first though – what is manufacturing? As straightforward as that question may sound, it’s one that doesn’t always get a straightforward answer, says Wendy Finianos, Guardian and Principal at ATKA Insurance Brokers. “The understanding and meaning of the word ‘manufacturing’ is our first risk,” she says. “In the Oxford English Dictionary manufacturing is making, production, creation, fabrication, construction and assembly, while in our insurance world, it applies to companies that hold themselves
out as a manufacturer, using their own brand on products, or are the importer of goods when the manufacturer has no place of business in Australia. “This leads to the risk of products being imported to Australia and flooding the market without the proper knowledge of the importers about the Australian law and their duties as they are now considered ‘manufacturers’.” This can lead to significant new risks being introduced, says Adelle Timmins, National Head of Public & Products Liability, at Berkley Insurance Australia. “It’s common to see these risks where the manufacture and/or customisation of the product being outsourced to overseas manufacturers or contractors, and the products are then often drop shipped directly from the overseas manufacturer to the end customer. For example, we have seen a lot of clothing and accessory manufacturing risks in recent years, for customisable clothing and accessories used as uniforms or promotional merchandise.”
Timmins says that while it is an efficient business model for the insured, who saves on warehousing and staffing costs by outsourcing the manufacturing and drop shipping, it means they don’t have the opportunity to perform quality assurance checks on the goods – which in some cases can create a significant issue. “For fairly innocuous products like clothing, the product’s liability exposure is minimal so doesn’t pose much of an issue,” she says. “However, for more exposed products that are often used as promotional items – such as wireless chargers and battery packs, or things like fidget toys that may end up in the hands of children – the lack of quality assurance checks by the insured can pose a significant exposure.” Tracing Risks to Their Root Cause In the manufacturing space that’s more in- line with the dictionary definition, there are a number of key risks at present – however many can be traced back to operational pressures.
50 / INSURANCE ADVISER DECEMBER 2025
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