Plastics Peaks & Troughs - A Challenge for You and Your Insurance Broker

The variation in the price of raw materials in the plastics industry creates a huge challenge for executives in the industry. A crystal ball or a damp finger in the air could come in handy when trying to predict costs and revenue when prices can change so dramatically.

With prices of recycled materials directly affected by trends in the virgin polymer market, nobody really escapes the impact of these fluctuations. An audible sigh of relief could be heard from the converters last year as polymer prices dropped through the floor in the final quarter. After years of rising materials prices at last an opportunity for margins to increase but how long would it be before customers were knocking on the door asking you to pass on the savings?

With the boot on the other foot plastics recyclers saw the value of their product hit rock bottom in October of last year. The implications were huge; a sudden drop in revenue, cash flow predictions out of the window, machinery mothballed and workers sent home.

So how can your insurance broker help? A good broker will understand that the fluctuating price of materials can impact on the turnover of your business and look to lessen the effect of these fluctuations on your insurance premium. One option may be to agree with the Insurer to rate against product tonnage for the purpose of the products liability premium. Tonnage figures by product line for the last five years should give the insurer a more accurate indicator as to whether the business has grown or contracted than, say, a 50% increase in turnover which may be largely due to a hike in the cost of raw materials.

In an industry where the goal posts are constantly on the move, taking the right advice is even more important.

To find your local insurance expert visit www.cherrypickedinsurance.co.uk/ta/bpf