There are lessons to be learned from recent losses in the metals sector, primary of which is that the businesses that recover fastest are the ones that planned their claim strategy long before the loss occurred. Designing business interruption and contingent business interruption policies to respond after a loss event is critical to reinstate operations, but specialist brokers are key to ensure coverage triggers are consistent with real operational risk.
Recent fires and unplanned outages across the U.S. steel and aluminum sectors have underscored a truth the insurance industry knows all too well—the real cost of a loss often isn’t in the flames, but in the downtime that follows.
Specific operations in steel and aluminum making processes (e.g. – smelters, anode production, arc furnaces, casters, preheating and heat treatment ovens and furnaces, rolling mills) and finishing operations (e.g. – slitting, stretching, milling, coating and painting, anodizing and plating, polishing) all carry additional inherent hazards, each of which have attributed to major historical losses in the industry.
When a critical manufacturing plant goes offline—whether due to fire, explosion, or equipment failure—the disruption can ripple far beyond the facility’s walls. In an interconnected supply chain, one outage can cascade across industries, halting production for suppliers, customers, and end users.
For property insurance professionals, these events reaffirm why business interruption (BI) and contingent business interruption (CBI) exposures demand the same rigor and attention as the property damage itself, both before and after a loss.
Proper BI valuation isn’t just about filling out a worksheet, it’s about understanding how a business generates revenue, what drives its margins, and how long it would truly take to recover. Resilient metals companies harness the insights and resources they need to make smart risk decisions long before an incident occurs.
Many insureds underestimate this process. Rebuilding a facility within 12 months doesn’t necessarily mean operations can resume as business as usual in this same timeframe. In reality, regulatory delays, supply shortages, customer attrition, and equipment lead times can stretch the “period of restoration” far beyond the physical rebuild.
At Willis, our Forensic Accounting and Valuation Services team assists clients through robust pre-loss evaluation. Forward-thinking metals companies will need to harness:
“By treating BI analysis as a living financial model rather than an annual formality, businesses can avoid surprises in the hectic post loss environment.”
Ryan Medlin | Managing Director, Willis Natural Resources, North America
“Too often, insureds only discover the gaps in their BI valuation when it’s too late. By treating BI analysis as a living financial model rather than an annual formality, businesses can avoid surprises in the hectic post loss environment.” Ryan Medlin, Managing Director, Willis Natural Resources, North America.
When a major incident does occur, attention quickly shifts from operations to recovery—which includes proving both the physical damage and the financial impact. Loss adjusters, forensic accountants and insurers will all ask the same question: What would your business have earned if this event had not happened? This question is resolved more accurately and quickly when pre-loss assessments have been completed and conveyed to insurers ahead of the loss.
The most successful BI recoveries share the following best practices:
In the aftermath of a major industrial event, the businesses that recover fastest are the ones that planned their claim strategy long before the loss occurred.
In heavy industry, few companies operate in isolation. Mills depend on smelters, smelters depend on power suppliers, and downstream manufacturers depend on steady material flow.
This interdependence is at the core of CBI income loss caused by physical damage at suppliers, customers, or other dependent properties.
When a key producer in the steel or aluminum value chain goes down, ripple effects can stretch for months and in extreme situations, years. Auto manufacturers, construction suppliers, and metal fabricators all feel the impact—even though their own plants have suffered no direct damage from the incident.
CBI exposures require intentional identification and underwriting. A lack of consideration in this area typically leads to uninsured loss at worst or underinsured recovery at best. Every insured should ask themselves:
Without this clarity, even a well-structured BI program can fail when a loss occurs outside your fence line.
The recent spate of fires and outages in the metals sector should serve as a wake-up call for insureds operating in this space but also in the broader industrial marketplace.
These incidents reveal three persistent truths about property risk:
In short, the event itself isn’t what determines the financial outcome — the quality of preparation does.
At Willis, our team of property brokers and forensic accountants translate operational complexity into insurable clarity. This means:
Business interruption is not an accounting exercise, it’s a survival strategy. These coverages are the firewall between a company’s balance sheet and financial disaster.
Recent losses in the steel and aluminum industries have reminded us that property damage is only the beginning. The real question is: how long until the business and its customers are whole again? In a world where one plant’s outage can idle an entire sector, the difference between recovery and collapse lies in preparation, data discipline, and coverage design.
Because when the furnaces go cold, the companies that planned ahead keep the lights on.
To find out how to build resilience against business interruption, contact our team.
