Industry Insights
Food, Agribusiness and Beverage
Significant Volatility
The current environment for Food, Agribusiness and Beverage (FAB) organizations is extremely challenging, and the COVID-19 pandemic has highlighted a number of fundamental issues facing this supply chain-critical sector. Traditionally a resilient and essential industry, it has faced huge fluctuations in demand, with some organizations such as those supplying retailers experiencing an increased need for their products. In contrast, those supplying food services, for example, have seen sharp reductions in demand in many cases. Additionally, supply chain disruption, cyber attacks, labor shortages and climate change are all causing significant volatility in the industry.
Rates are continuing to harden, particularly for property and liability lines, and now increasingly for cyber, D&O and crime. Risk managers are under pressure to keep their total cost of risk down, causing many to turn towards captives in an attempt to absorb some of the burden. Indeed overall net aggregate retention for captives we manage in this sector has increased by 60 percent since 2018, with notable increases in general/public liability (454 percent), Marine (536 percent) and PD/BI (31 percent).1
Taking a Longer-Term View
The volatility and hard market conditions currently being felt across the industry are beginning to cause a change in mindset among some organizations, with many now taking a longer-term strategic approach to risk management, including the consideration of captives. Using a captive can make companies less susceptible to the fluctuations of the traditional insurance market. Those companies can have more control over their insurance program - an attractive prospect in a sector that can be unpredictable.
And with the FAB industry particularly at risk from the impact of climate change, many boards are discussing their ESG credentials and how green captives can be used to support that agenda – from financing the risks associated with ESG to helping to align a parent company’s values with that of its captive.
Footnotes
1 Aon's 2021 Captive Benchmarking Survey
Sample Size
57
Insurance entities under management
$882M
In Gross Written Premium (USD) under management
Lines of Business Written
Type of Entity
Top Five Emerging Risks
By 2024
Global Top 10 Risks - Food, Agribusiness and Beverage
Data on Risk Readiness and Losses from Top 10 Risks in Past 12 Months
Parent Country/Territory and Size by Revenue
Find out if a captive could help your organization manage risk more efficiently. Take the two-minute questionnaire