Written by: Katie Hensley, Vice President, Cottingham & Butler (563) 587-5464 | kahensley@cottinghambutler.com Introduction When manufacturers think about risk, the focus often falls on equipment breakdown, workers' compensation, and property losses. However, cyber risk has become a growing concern for manufacturers, their customers, and insurance carriers. Today's manufacturing operations rely on interconnected technologies to manage scheduling, engineering specifications, inventory, shipping, quality documentation, and financial transactions. A successful cyberattack can disrupt operations just as effectively as a major property loss. Why Manufacturers Are Targets Manufacturers support defense, aerospace, energy, transportation, and critical infrastructure industries. They often hold valuable engineering drawings, production specifications, customer requirements, testing data, and proprietary process information. Sensitive customer data, intellectual property, interconnected systems, and the high cost of downtime together make manufacturing operations attractive targets for cybercriminals. Cyber Events Become Business Events The greatest exposure is often not stolen data. It is the inability to operate. A plant may have fully functional equipment, but if ERP systems, production schedules, engineering files, customer communications, or shipping platforms become unavailable, operations can quickly grind to a halt. This is why underwriters increasingly view cybersecurity as a business continuity issue. Why Cyber Insurance Matters Even organizations with strong cybersecurity programs can fall victim to a cyberattack. Cyber insurance provides far more than financial reimbursement. Many policies provide access to digital forensic investigators, breach coaches, privacy attorneys, cybersecurity response specialists, public relations consultants, crisis management teams, data restoration experts, and accountants who help quantify business interruption losses. For manufacturers, the largest cyber loss is often lost production. Cyber insurance helps organizations navigate operational disruption, recovery costs, communications, and business interruption exposures. Top Cyber Lessons Every Manufacturer Should Remember Application Accuracy Is Your First Line of Defense Cyber insurance applications have become increasingly detailed. Inaccurate information can create claim challenges and potentially jeopardize coverage. Coverage begins with accurate information. Attackers Are Patient. Proactive Detection Is Not Optional Cybercriminals often spend weeks or months inside a network before taking action. Artificial intelligence now enables more convincing phishing campaigns, automated reconnaissance, and highly targeted attacks. Continuous monitoring and cyber preparedness assessments are essential. A Response Plan on Paper Is No Plan at All Organizations should know who to call, how to engage insurance carriers, and what actions should occur during the first critical hours of an incident. Tabletop exercises should be conducted regularly. Compliance Satisfies Auditors. Security Protects Your Business. Compliance is often the floor rather than the ceiling. Passing an audit does not mean attackers cannot access systems. Effective security requires continual improvement. The Cloud Shifts Responsibility. It Does Not Eliminate It. Cloud providers secure infrastructure, but organizations remain responsible for identities, applications, data protection, and incident response. Your Supply Chain Can Become Your Weakest Link. Manufacturers routinely exchange engineering documents, specifications, certifications, and quality records with customers and suppliers. A cyber incident affecting a supplier, software vendor, or logistics partner can disrupt operations throughout the supply chain. Acquisitions Create New Exposure. Attackers may compromise smaller organizations and remain undetected while transactions progress. Cybersecurity reviews should carry the same weight as financial and legal due diligence. Business Interruption Is Often the Largest Loss. For many manufacturers, the greatest impact of a cyber event is lost production rather than stolen data. Cyber Insurance Is More Than a Financial Tool. A quality cyber policy provides access to specialized experts and recovery resources that most organizations do not maintain internally. Cybersecurity Is Becoming an Insurability Issue. Underwriters increasingly evaluate multi-factor authentication, employee training, backups, incident response planning, monitoring, vendor management, and governance controls. Preparedness can directly influence coverage and pricing. Conclusion Cyber risk is no longer just an IT concern. It is a business interruption issue, a supply chain issue, and increasingly an insurability issue. Manufacturers that combine strong cybersecurity controls, cyber preparedness, effective response planning, and appropriate cyber insurance will be best positioned to recover from future incidents.

Cottingham & Butler | Commercial Insurance Market Index Q2 posted a second straight quarterly decline, property is leading the drop, while auto and Umbrella rates are still climbing. Here is what moved, why, and how to think about it. Q2 2026 was the second consecutive quarter of broad rate declines. The market index registered a 2.0% average reduction, deeper than the 1.2% decline in Q1 and the first back-to-back drops since the run of 32 straight quarterly increases ended in late 2025. The hard market that defined renewals for most of a decade has given way to more competitive conditions, and this quarter it moved faster. One reminder before the numbers. These survey indexes are lagging indicators. They describe where renewals landed a quarter ago, not what is happening in the market today. On the ground, conditions are moving faster than the published averages suggest, and carriers are already competing harder than a one-quarter-old number can show. Property has swung into a genuinely competitive market. Workers’ compensation, management liability, and cyber remain buyer-friendly. General Liability and Umbrella are still firming, and commercial auto continues on its own upward track. Overall market Quarters ended Commercial property Commercial auto −2.0% 32 −6.3% +4.5% Rates by coverage The headline reduction masks real divergence between coverages. Property led the decreases and accelerated its decline, while workers’ compensation, cyber, and management liability stayed competitive. General Liability and Umbrella kept rising on litigation severity, and commercial auto posted its 60th consecutive quarterly increase. The market is broadly softer, and softening faster, but far from uniform. Coverage Q1 2026 avg. change Commercial Property −6.3% Workers’ Compensation Continued easing Cyber Declines flattening Directors & Officers / EPLI −1.8% (in the -1% to -3% range) General Liability +2% to +5% Umbrella +5.3% Commercial Auto +4.5% Source: Council of Insurance Agents & Brokers Commercial Market Index, Q2 2026. Survey averages; individual accounts vary widely by exposure and loss history. C&B Perspective Survey averages describe the overall market, not any individual account. Accounts with clean loss history and well-documented exposures land at the favorable end of every range, while distressed risks continue to face firm terms, even in lines that are otherwise softening. And a softening index does not mean carriers hand back rate. Underwriters resist a turning market. They still press for increases on lines like auto and umbrella, and they push back on property reduction requests. Our role is to push back in return, to advocate for our clients, and to secure the market-competitive terms the broader market now supports. An account’s own loss history, exposure quality, and how hard its program is marketed determine whether it beats the market or trails it. How rates vary by program size The softening did not reach every program at the same pace. For most of the hard market, increases hit medium and large accounts harder than small ones. That pattern has reversed. The largest, most complex programs are posting the deepest decreases, because they attract the most insurer competition and bring the data and leverage to capitalize on it. Mid-sized programs have moved into decreases as well, and the smallest, most standardized programs are the last to reflect a shift and are still seeing modest movement. Softening began at the top and is steadily moving down-market. Property: the softening accelerates Property is where the turn is most pronounced, and Q2 sharpened it. After significant increases through 2022 and 2023, the line tempered in 2024, turned slightly negative in the back half of 2025, and dropped to −5.5% in Q1 and −6.3% in Q2. The driver is profitability. A stretch of poor loss years gave way to improving results, and insurers now have appetite they are willing to deploy. It is, however, a tale of two markets. Risks hit hardest during the hard market, particularly those placed in the London and excess and surplus (E&S) markets, are now seeing significant, often double-digit, reductions. Standard-market risks are seeing a more measured range, from flat renewals to reductions in the 5 to 10% area. Every risk is treated on its own merits, and the gap between the best and worst outcomes remains wide. This is where advocacy matters most right now. Standard-market carriers will hold the line on rate if a program is not marketed and messaged well. Our marketing leaders are actively working these conditions with standard-market underwriters, pushing for the reductions the broader market supports rather than accepting a flat renewal by default. C&B Perspective The improvement traces in part to easing catastrophe losses. 2025’s roughly $101B in insured catastrophe losses came in well below 2024’s $180B-plus. But the underlying volatility has not gone away. Severe convective storm activity, wind and hail, continues to drive losses, particularly across the Midwest, and insurers have responded with percentage-based wind and hail deductibles (commonly 1 to 3% of values) that shift more of that risk to the insured. Softer rate is real, but the structural exposure deserves the same scrutiny it did a year ago. Casualty: general liability and umbrella keep firming While property eased, the casualty lines moved the other way. General liability continued to firm, with rate increases in the low-to-mid single digits, as insurers cited rising loss severity, social inflation, and growing exposures such as PFAS and difficult product and food-related liability. The rate trend has been improving over the past year. Umbrella tells a sharper version of the same story. Pricing began firming dramatically in 2019 and has continued into 2026, at +4.8% in Q1 and +5.3% in Q2, driven largely by commercial auto severity. Years of compounding remain on the books, and capacity at the higher layers ($10M and $25M) stays limited. Fleet-exposed accounts continue to face steeper increases than the broader market. An improving broader market does not justify every increase a carrier requests. Where a double-digit umbrella increase is not supported by an account’s own loss experience, it deserves a hard push back, and that is where marketing the program and advocating on the client’s behalf earns its keep. Why Umbrella severity keeps climbing Average commercial auto verdict: roughly $3.6M in 2010, trending to over $15-20M in recent years (concerning trend, driven by large verdicts) Average cost to settle a commercial auto fatality: about $1.9M in the mid-2000s to over $4M today, with a median verdict above $5M. Nuclear verdicts: $10M to $100M awards leveling off after a post-COVID spike, while “mega” verdicts above $100M continue to rise. Sources: industry verdict studies including Travelers’ Top-100 Verdicts of 2024 and CaseMetrix data; figures are illustrative of the severity trend. Why commercial auto is still rising Commercial auto is the exception that has now lasted 60 consecutive quarters. Its pricing tracks its own claims experience rather than the broader market cycle, which is why it can keep rising even as property and other lines fall. That said, the increase is lessening. Auto has come down slightly in each of the past six quarters and sits at +4.5% in Q2, in the +4% to +8% range across the market. After years of relentless rate, the industry may be starting to turn the corner on profitability, even if it is not there yet. What’s driving commercial auto claims Liability severity and nuclear verdicts. Rising lawsuit severity and litigation financing keep pushing verdicts higher, reshaping insurers’ loss expectations across entire books. Repair and replacement cost. Vehicle technology, sensors, cameras, and driver-assist systems, makes every collision more expensive to repair, with parts and labor inflation compounding the effect. Distracted driving. Distraction and congested roads keep claim frequency elevated, adding to the severity problems. Driver shortage. A thin driver pool puts less-experienced operators behind the wheel, feeding the frequency problem. The line’s 2025 combined ratio sat around 109%, meaning insurers still paid out more than they took in, and the line has been unprofitable in 14 of the past 15 years. Conditions are improving slightly, but auto remains the hardest line to place well. The broader point is not that auto is uniquely difficult. It is that not every coverage responds to the same forces. Some are priced on the broad market cycle, others, like auto, on their own claims history. Knowing which is which is the foundation of a sound renewal strategy. For Transportation Clients Our transportation quarterly update goes deeper on what moves your cost — verdict exposure, telematics and safety data, and captive and deductible structures. The buyer-friendly lines: comp, management liability, cyber Workers’ compensation. Loss severity has improved on better safety and claims management, keeping the line competitive. The watch item is medical inflation. The medical portion of comp claims now exceeds 60% of costs, and continued growth, along with rising wages on the indemnity side, will eventually pressure rates. Directors and Officers / EPLI (about −1.8%). Reductions held steady in the −1% to −3% range and are likely to stay stable, even as claims frequency and severity continue, driven by wage-and-hour litigation and an elevated litigation environment. Cyber. Pricing has stabilized as insureds improved IT protocols in response to ransomware. The market may be nearing the floor. Declines are likely to flatten, and rates could begin to rise again, though at a far slower pace than the last cycle, if loss activity reaccelerates. What it means for your industry Your renewal will look very different from the headline, depending on which coverages make up most of your program. The reads below show what this quarter’s movement tends to mean industry by industry. Whatever your industry, the logic is the same. Identify the coverages that carry the most premium, and track which way each one moved. Trucking. The biggest cost is still rising. Commercial auto anchors the program and climbed again, so the broad softening reaches these businesses the least. Easing property and workers’ compensation help around the edges, but the fleet drives the total. Distribution. A split picture. Easing property and warehouse coverage pull one way, the same rising auto costs that affect trucking pull the other. Where a distributor lands depends on how much of the program sits in the fleet versus the facilities. Manufacturing. Among the better-positioned. Property is typically the largest cost and fell the most, and insurer appetite is broad. Product liability and owned vehicles work against that, but the weight of the program sits on the side that softened. Construction. Mixed, and structure-dependent. Property eased while excess and Umbrella rose and contractor coverage held roughly flat, and contractors with large fleets carry the auto increase. How the program is built matters more than any single coverage’s direction. Food & agriculture. Genuinely mixed. Property and equipment costs are easing, but product and food-liability exposure is exactly where General Liability insurers are seeking rate, and any fleet adds auto pressure. Retail. Generally favorable. Property and cyber, the coverages that matter most to multi-location and online retailers, both fell. General Liability is the offset to watch, particularly for high-traffic formats. Professional services. A softer picture than in recent years, with directors and officers, employment practices, and cyber coverage all easing. Firms with little property or vehicle exposure see the cleanest relief. Healthcare. Cross-currents. Easing workers’ compensation and cyber pull against firmer liability and rising medical severity. The outcome turns on the balance between staffing exposure and clinical and professional liability. Higher education. Broadly favorable on paper, as property, cyber, and management-liability coverage all eased. The exceptions to watch are owned vehicle fleets, abuse and athletics exposure, and anything tied to enrollment. For Risk Management Clients Our risk management quarterly update goes deeper on the market conditions, program structure, and trends shaping your renewal. Get the full outlook to see what this market means for your program. Managing total cost of risk A softer market naturally turns attention to rate, but rate is only part of what determines the long-term cost of a program. The more durable opportunity is what a market like this lets a business address in the underlying risk. It is also where an experienced advisor adds the most value. A few principles shape how we approach a program heading into renewal. Data quality drives the outcome. Insurers price against your claims history, exposure detail, and current values, so how that information is assembled and presented often matters as much as the underlying risk. In a competitive market, clean, well-documented data is often what earns the better terms. Advocacy still matters in a soft market. A falling index does not mean carriers volunteer rate relief. Marketing a program hard, meeting with carriers on strategy, and holding them to market-competitive terms is what converts a favorable market into a favorable renewal. Understand what’s driving each coverage. Some costs move with the broad market, others, like commercial auto, on a business’s own claims. Knowing which is which sets realistic expectations for where the market will deliver relief and where progress has to come from risk management. Premium is one number; total cost of risk is the real one. Deductibles, retained risk, the claims that do occur, and program structure all shape what coverage actually costs over time. A lower premium built on the wrong structure can cost more in the long run. Approach the market deliberately. A more competitive environment is the time to validate the market, surface issues early, and set renewal strategy well ahead of the deadline. The earlier that work begins, the more leverage a business has when terms are set. The organizations that treat renewal as a point-in-time price check tend to capture the least. Those that manage total cost of risk year-round are positioned to benefit whichever way the market moves. Signals for next quarter Whether the softening keeps accelerating. Q2 deepened Q1’s decline. If property and the flattening lines keep moving, more of a typical program lands in buyer-friendly territory. Property capacity and discipline. Whether insurers hold their pricing discipline as they compete, or over-correct to win business, will determine how long this relief lasts. Auto claims, not the rate. Auto pricing follows auto losses, so the rate is a lagging signal. Verdict sizes and repair-cost inflation will show whether the line is moving toward relief long before the rate does. Umbrella discipline. Umbrella increases ticked up again in Q2. Watch whether carriers distinguish genuinely fleet-heavy, loss-driven accounts from clean ones, or keep pushing broad double-digit increases the market no longer justifies. Cyber finding its floor. Declines are flattening. If ransomware loss activity reaccelerates, cyber is the line most likely to firm first. Medical inflation in workers’ comp. Medical costs now make up more than 60% of comp claims, the clearest force that could push that line’s rates back upward. Know where the market stands. Know where you stand. Whether you are heading into renewal, evaluating coverage, or looking for ways to manage rising costs in the lines that are still firming, our team brings the market knowledge, insurer relationships, and advocacy to help you make the right call, and the year-round risk and claims expertise that turns a market shift into a lasting advantage. Analysis based on Cottingham & Butler’s review of Q2 2026 commercial property and casualty market conditions, including the Council of Insurance Agents & Brokers Commercial Market Index, AM Best market reporting, and industry catastrophe and verdict data. Rate ranges reflect Cottingham & Butler’s market observations; survey figures reflect CIAB averages across all account sizes. Industry and segment readings are directional; individual results vary by exposure, geography, and loss history.

Staying compliant in 2026 means keeping pace with a benefits landscape that isn't slowing down. From new legislation and regulatory updates to evolving employer obligations, the details matter, and missing them can be costly. Our 2026 Compliance On-Demand Series is designed to keep you informed, prepared, and confident heading into every quarter. Check out the full recordings of past webinars below! Want to catch us live? Check out our upcoming webinars! ACA Employer Reporting Check out our latest webinar on ACA employer reporting, held right in the midst of the 2025 filing season. We walked through the key requirements for Forms 1094 and 1095 and highlighted common pitfalls, best practices, and practical tips to ensure accurate, complete, and compliant reporting. ERISA Fiduciary Duties This session is on ERISA fiduciary duties for health and welfare plans, designed to help employers understand their obligations as plan sponsors. We reviewed key ERISA requirements, highlight common compliance pitfalls, and shared practical best practices to minimize fiduciary risk. Navigating Employer-Sponsored Coverage & Medicare During this time we discuss how Medicare interacts with employer-sponsored health plans, an increasingly important topic as more employees continue working past age 65. We broke down eligibility and enrollment timing for Medicare Parts A, B, and D, clarify how Medicare Secondary Payer (MSP) rules impact group plan coordination, and highlight key considerations such as HSA eligibility, COBRA timing, and employer premium reimbursements. Compliance Checklist & Regulatory Updates In this compliance refresh webinar, we walked through key deadlines, best practices, and 2026 regulatory updates — giving you a clear roadmap for the rest of the year. Leaves of Absence – Focus on State Mandates This webinar discusses how leave laws continue to evolve and administering employee benefits during protected and unpaid leaves has become increasingly nuanced. In this session, we broke down employer obligations, benefit continuation requirements, and key decision points when coordinating federal, state, and company leave policies. Nondiscrimination Rules This webinar helped employers understand when and how they can differentiate benefit programs while staying compliant. Watch the recording to see how we broke down the various nondiscrimination requirements that apply to employee benefit plans, including tax code testing rules for highly compensated and key employees and protections against discrimination based on health status, disability, and other protected characteristics. Mid-Year Regulatory Update In this session, we recap the most important benefits and employment law developments from the first half of 2026, plus a look at what's coming and practical takeaways to help employers navigate the rest of the year. HSA vs. FSA vs. HRA In this session, we discuss choosing the right account-based benefit strategy. We broke down the similarities and key differences among HSAs, HRAs, and FSAs — including eligibility, funding rules, tax treatment, and portability — and explored how employers can strategically leverage each option to support workforce needs while staying compliant. Open Enrollment - Renewal Checklist Open enrollment season came with a long to-do list, and this webinar helped attendees work through it with confidence. We walked through key tasks from plan review and employee communications to system updates and post-enrollment audits, plus a regulatory and legislative update on recent changes that may impact 2027 offerings and year-end compliance items to help close out the year strong.

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We help clients lower their total cost of risk by challenging the status quo, solving complex business problems and delivering creative insurance solutions. Our technical expertise and proprietary programs, combined with our commitment to client service is the foundation of the value we bring to our clients every day. Case Study Leveraged best practices and good loss experience to return $80,000 year after year Read More Article HR’s Role in Mergers and Acquisitions Read More Article Coverage Basics: Cyber Insurance Read More

Manufacturing Leveraged best practices and good loss experience to return $80,000 year after year Up Published on Written by: Page View A best-in-class processing equipment manufacturer had been seeing a decrease in their loss experience, yet they were not seeing a decrease in how much they were paying for insurance. They were curious to learn if there was a way to incentivize their increased focus on safety and best practices. Their current program was "off the shelf" and was not designed to meet their specific needs. After engaging with Cottingham & Butler's Risk Management Assessment (RMA) , they quickly learned that there was not only a better way to buy insurance, but that there were significant coverage deficiencies in their program. The company recognized the value of a customized loss-sensitive program, as well as having a broker partner who would advocate on their behalf for claims. Program Design Delivered a loss-sensitive program option, Horizon, that would allow the company to receive up to 50% of their premium back for good loss years. Identified 3 carriers that had never seen the account before, and had an interest in the business. Coverage Identified 20 coverage deficiencies in their existing program. Significant deficiencies include: Multiple sub-limits were inadequate compared to their operations. The policy was designed for Architect and Engineering Professionals, NOT for Manufacturers. Multiple exclusions related to the core business operations of the company were present. No flood/earthquake coverage in a high-risk area. Contractual Risk Transfer Highlighted areas of concern and how their current risk transfer methods were inadequate for their industry and line of work. Cottingham & Butler put together recommendations and corrected critical mistakes in policy language Stability After joining Horizon, the company experienced a large loss in its first year of implementation. Even after the loss, their spend was similar. By paying in guaranteed cost, they avoided the increases they would have seen in the standard market. Since then, the company has received $80,000+ each year for their good loss experience. Claims Advocacy While the company had great loss experience, they had not previously received any claims reviews or advocacy services. After being made aware of the impacts of delayed reporting, their claims reporting processes were improved and consistent claim reviews were scheduled with the team. April 25, 2023 Cottingham & Butler View All Posts TAGS: Article Case Study Employee Benefits Manufacturing Property & Casualty Claims Management Coverage Basics Cyber Loss Control & Prevention Mergers & Acquisitions Upcoming Events SAFETY TRAINING October 14, 2026 FMCSA 101: A Practical Introduction to FMCSA Compliance Don't let compliance be complicated. Join us for a one-day training built for new & current safety professionals, fleet managers, operations personnel, and anyone who wants a compliance refresher. Register Now! Register Now! WEBINAR December 17, 2026 End of Year Wrap-Up & Looking Forward to 2027 The compliance landscape for health and welfare benefit plans continued to evolve throughout 2026. As the year winds down, this webinar will recap the most impactful regulatory developments and compliance changes from 2026 and what they mean for employers. We’ll also preview what’s ahead in 2027, including anticipated rules, deadlines, and trends that could shape benefit planning. Register Now! Register Now! WEBINAR November 19, 2026 Mid-Year Election Changes When employees request mid-year benefit changes, the rules aren’t always straightforward. In this session, we’ll examine the interaction between HIPAA special enrollment rights and Section 125 cafeteria plan election change rules, highlighting when changes must be permitted—and when they may be restricted. We’ll also explore key differences between requests to add coverage versus drop coverage mid-plan year, helping employers administer changes consistently and compliantly. Register Now! Register Now! View All Events Connect with a C&B Representative Today!