Insurance protection gap exacerbates already heightened risk in food and drink supply chains

A lack of alignment between business-critical risks and the insurance cover purchased for them is leaving food and drinks companies exposed at a time of already heightened supply chain risks, according to research from Lloyd’s and WTW.

The joint report identifies a number of key factors driving risk across food and drink supply chains, including economic pressures, demand changes, labour challenges, technology, transport, geopolitical and political risk, and climate change and sustainability – and highlights the opportunity for the insurance industry to develop new products to protect against the loss of Tier 2 suppliers, notifiable pests and diseases, transit delays and commodity price volatility.

Rebekah Clement, sustainability director at Lloyd’s said: “In today’s global economy, the food and drink industry is no stranger to the effects of shifting geopolitics and economic uncertainty. It is arguably more important than ever that businesses ensure the safe and timely transportation of critical and often perishable products which maintain a level of balance for global food security.

“Whilst insurance cover for supply chain risks does exist today, the findings in our research point to a lack of alignment between shifting key risk drivers for food and drink business and their current insurance cover. Uniquely positioned to respond, through initiatives like Lloyd’s Futureset, the Lloyd’s Lab and the SMI, the Lloyd’s market can further open lines of communication between food and drink businesses and their insurers and look to this research as roadmap for potential product innovation.”

Sue Newton, food and drink practice leader GB, WTW, added: “This Lloyd’s Futureset/WTW Research Network report is part of our ongoing commitment to keeping pace with the changing risk landscape to help protect food and drink businesses and support their successful growth.

“We continue to deepen our understanding to drive improved supply chain resilience and to empower food and drink organisations’ in optimising their risk protection in the face of ongoing volatility, and this work with Lloyd’s brings an added perspective to this.”

Worth US$11trn, the food and drink industry is an integral part of the global economy, and the safe movement of raw ingredients and products is the backbone of international trade

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