In the News… is a new blog series from Fenchurch Law that translates today’s headlines into practical insights for policyholders. Each post is concise, actionable, and designed to help businesses and brokers navigate an ever‑changing risk landscape.
Singapore’s Manufacturing Surge – What It Means for Your Insurance
On 26 November 2025, The Straits Times reported: “Singapore factory output surges 29.1% in October, more than expected, led by pharma and electronics. [1]”. This is great news for the economy, but it raises an important question for policyholders: Is your Business Interruption (BI) insurance keeping pace with your growth?
When your business expands rapidly, the insurance arranged months ago may no longer reflect your current exposure. Underinsurance is a real risk, and if disaster strikes, it could lead to a costly insurance dispute over your Business Interruption claim.
Why Rapid Growth Creates Underinsurance Risks
For high‑growth sectors like electronics, pharmaceuticals, and aerospace, output and revenue can soar far beyond the figures declared at renewal. If your factory is producing 50% or 100% more goods than before, a shutdown due to fire or machinery breakdown would result in much larger financial losses per day. But will your BI policy cover that?
Business Interruption insurance is designed to compensate for lost income when operations are disrupted by an insured peril. The problem? BI limits are usually based on projected gross earnings. If those projections are outdated, you may be underinsured, and any claim could be reduced significantly.
The Cost of Underinsurance
Underinsurance isn’t just a technicality; it can be financially devastating. If your BI cover only reflects 70% of your actual gross profit, your claim payout could be cut by 30%. In effect, you become your own insurer for the shortfall.
How to Avoid an Insurance Dispute: Practical Steps
To protect your business and avoid disputes over BI claims, take these actions now:
- Review BI Values Immediately – Compare your current gross profit with the figure on your BI schedule. If turnover has spiked, update the insured amount.
- Check Your Limit of Liability – Ensure the maximum payable under your BI policy matches your current exposure. Evaluate whether your indemnity period remains adequate.
- Use Policy Extensions – Look for clauses like “130% uplift” or adjustable BI cover. These can provide a buffer, but they’re no substitute for accurate declarations.
- Scenario‑Test Your Coverage – Model a worst-case interruption (e.g., six-month shutdown). Would your BI limit cover the loss? If not, you’re underinsured.
- Consult Your Broker on Mid-Term Adjustments – Don’t wait for renewal. Most insurers allow endorsements mid-policy to increase BI limits for a pro-rated premium.
- Avoid Intentional Underinsurance – Cutting declared values to save premium is a false economy. When a claim arises, the deduction for average will bite.
- Update Related Covers – Property damage values and contingent BI cover should also reflect your expanded operations and supply chain dependencies.
Bottom Line: Stay Agile
Singapore’s factory output boom illustrates how rapidly risk profiles can shift. A BI policy should never be “set and forget”. Regular reviews and timely adjustments are essential to avoid underinsurance, protect profits, and prevent costly insurance disputes when making a Business Interruption claim.
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