Navigating complexity: E&S market's appeal for equipment breakdown buyers

Today’s business equipment is more high-tech and specialised than ever. Despite their upkeep and advanced features, unforeseen breakdowns, malfunctions, or damage can disrupt operations and result in substantial financial losses. Equipment breakdown insurance provides a safety net, shielding businesses from these unexpected equipment failures.

Like other property coverage, the equipment breakdown market has experienced rate increases. As a result, businesses are shopping around for coverage with more buyers turning to the surplus lines market to address their equipment breakdown needs.

Complexity complications

Equipment breakdown rates are rising for several reasons. For one, the value of complex equipment continues to climb, together with the cost of fixing it. Fixes not only include more expensive replacement parts, but also often require more specialised technicians for diagnosis and repairs, with higher service fees and longer wait times.

Supply chain disruptions and longer lead times are also impacting rates. Ongoing supply chain disruptions have extended lead times for parts and new equipment from 30 days to potentially six months, increasing possible disruption.

Predict and protect

Businesses can take steps to prevent breakdowns by modernising their preventive and predictive maintenance practices to identify potential risks and take proactive measures to prevent breakdowns. This can include ensuring that employees are properly trained to operate and maintain equipment, reducing the likelihood of breakdowns caused by human error. Using available technology to monitor equipment performance in real time can provide early warnings of potential issues and allow for proactive maintenance.

When breakdowns do occur, a contingency plan helps. Developing a contingency plan for equipment breakdowns, including access to spare parts and backup equipment, can help minimise downtime.

Access to flexible insurance options offered by surplus lines markets provides another valuable protection to keep equipment up and running.

By Charlie Lage, equipment breakdown underwriter, AXA XL, Americas