The new insurance solution has been developed by the insurance brokerage in partnership with Swiss Re Corporate Solutions
Willis Towers Watson has launched a five-in-one insurance solution for automotive manufacturers in Asia who export across the world.
The new solution has been developed in collaboration with Swiss Re Corporate Solutions. It is said to enhance Willis Towers Watson’s casualty offering for manufacturers of automotive electronics or mechanical components.
Through the solution, manufacturers get insurance coverage on product safety, product guarantee, third-party financial loss, government recall, general liability, product liability, and also manufacturing errors and omissions.
According to Willis Towers Watson, the incidents of vehicle recalls have been surging across the world in recent years, with a large number of them emerging from Asia.
The insurance brokerage said that the main drivers of vehicle recalls are the increase in the usage of common components across various models, quick shifts in vehicle technology, and growing regulatory pressures regarding safety requirements.
The company said that although some risk pertaining to product defect can be mitigated with the help of technology during the production, errors can still impact global product manufacturers and also automotive brands. Due to these, automotive manufacturers are hit with a rising frequency and severity of losses in the present global marketplace, said the company.
Willis Towers Watson casualty head Barbara Fabbri said: “Liability losses and vehicle recalls can have a significant effect on a company’s balance sheet, causing cash shortage that can eliminate profits. Not only can it result in financial losses, it can also affect a company’s shareholders value, the brand and reputation of the company.
“Whether the cost is incurred by the automotive manufacturer or a third-party, such as a direct customer of the vehicle, the costs to cover labour, transportation and disposal due to a product recall can be expensive.”
Willis Towers Watson said that while European and US automotive firms typically need product recall coverage of $5m-$10m, their Asian counterparts usually seek liability insurance with a recall extension of $2.5m. This is for covering third party expenses, which does not offer full or sufficient cover, said the insurance brokerage.