Gallagher McIntyre

Client Services

Case Studies

Manufacturer – Property Values Analysis Resulting in Premium Savings

Our client is a manufacturer of plastic bottles for various industries and produces unique labeling operations that create integrated product branding and use copy into the actual plastic container.

Business Situation/Challenge

Our client has extensive state of the art capital equipment to produce plastic squeeze bottles with integral print copy, as well as more common label printing capabilities. Downturns in the more traditional labeling market due to advances in the integrated products created a purging of the industry. This resulted in a glut of used equipment in the traditional print labeling marketplace.

The McIntyre Group requested and reviewed an Appraisal prepared by an independent firm that identified several sources of replacement equipment for the traditional label machinery. This report identified acquisition costs of equipment of like kind and quality to that currently used by the Insured. The estimates of the cost to acquire, ship and install the machinery were a fraction of the actual replacement costs carried on that portion of the insured’s Property Statement of Values.

A review with the client revealed that costs for this machinery had been trended for inflation for a period of years without consideration for changes in the industry. Values had escalated substantially when compared to the cost to replace the same equipment per the appraisal company’s sourcing. In essence the values were overstated to an amount that created an opportunity for a significant return premium if the equipment were to be replaced with used equipment.

Solution

Gallagher McIntyre resolved the issues by:
Working with their property insurer, we reviewed the appraisal and negotiated an option to reduce property values with the understanding that in the event of loss or damage to this equipment, that used equipment would be sought as replacements. In the event of a partial loss, the equipment would be repaired with new parts up to the cost of the replacements available in the used equipment market place.

Benefits

By dramatically reducing the values at risk without exposing the client to uninsured loss, and setting in place a path to how this aging technology was to be managed following a loss, Gallagher McIntyre was able to save the client over $50,000 annually in property premiums alone.

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