FM Essential brings resilience to Australian manufacturing
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Australian manufacturers face a mix of energy costs, supply pressures and production risks, making specialist risk engineering increasingly important for brokers and their clients
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A MANUFACTURING plant can be running perfectly on a Monday morning but facing disruption by Tuesday afternoon. A small incident can halt production, delay orders, disrupt deliveries to suppliers and expose the business to reputational damage. The chain of events resulting from a single point of failure has begun.
While the machinery may still be intact, the workers on the floor and the orders still pending, the real exposure is often the length of time between stopping and starting again. A production interruption can quickly become a problem that extends well beyond the damaged asset, affecting
Established nearly two centuries ago, FM is a leading mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its policyholder-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organisations, including one of every four Fortune 500 companies. They work with FM to better understand the hazards that can impact their business continuity to make cost-effective risk management decisions, combining property loss prevention with insurance protection.
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FM Essential in a nutshell
Broker-led property insurance solution with FM Engineering support
Aimed at medium risk-complexity manufacturers
Excludes high-hazard industries such as chemicals
What it is
“FM Essential brings the power of FM Engineering into this market segment where we can work with businesses to build resilience”
Antony Cavka,
FM
customers, market share, skilled labour and the ability to resume normal operations.
That is where manufacturing becomes a particularly demanding insurance proposition. The physical loss may be relatively straightforward to identify, but understanding what could bring production to a halt, how long recovery might take and what can be done to reduce that downtime requires a much closer understanding of the business itself.
That is the thinking behind FM Essential, a product recently launched by FM for manufacturers in Australia. It is aimed at a part of the market where the risks can be too complex for a conventional insurance approach, but the business may not have the scale or internal resources of a major industrial operation.
Brokers are often asked to find solutions for manufacturers whose risks are unusual, yet whose businesses can be too small to have dedicated internal risk engineering resources. Understanding how those businesses operate, where production can be interrupted and what can be done to reduce the consequences of a loss can therefore become an important part of the broker-client conversation. Increasingly, that conversation is moving beyond what happens after a loss towards what can be done to prevent it occurring in the first place.
Manufacturing has changed The idea that Australian manufacturing has largely disappeared is an easy one to accept. World Bank data shows that manufacturing’s share of Australia’s GDP has fallen to about 5% in 2025, down from close to 14% in 1990.
Look more closely, though, and the picture is less straightforward. Large-scale production of standardised goods can face intense competition from imports, particularly when products can be manufactured overseas in long runs, packed into standard shipping containers and transported with relatively long lead times.
But Australian manufacturers have retained an advantage in areas where proximity, specialisation and responsiveness are more valuable.
“Not all manufacturing has disappeared. It has often been the larger-volume, standard-size products facing the largest competition from imports,” says FM vice president and director for Australia and New Zealand Antony Cavka.
That leaves a substantial group of businesses producing specialised or higher-value goods, alongside sectors where distance creates its own commercial problems.
“Specialised, value-added manufacturing remains competitive in Australia. Another area is food and beverage, where long shipping times can consume much of the shelf life of FMCG-type goods,” Cavka explains.
The result is a manufacturing sector in which a production interruption can have consequences that are unusually specific to the business. A manufacturer may have a product that cannot simply be sourced from another supplier, a customer that cannot easily wait for a replacement or a process that takes considerable time to restart. Those characteristics make resilience particularly relevant.
The cost of stopping
For a manufacturing business, downtime is measured in more than hours on a clock. The commercial position of the business when production resumes can be hard to predict.
“An interruption to production that creates lengthy downtime has a negative impact on their brand and can compromise their market share,” Cavka says.
That is where the distinction between insurance and resilience becomes important. Insurance can provide financial support for insured losses. It cannot necessarily restore the relationships, skills or market position that may have been weakened while production was offline.
“Downtime exposes a company to many impacts on the business that aren’t insured. These include reputational damage, loss of market share, loss of skilled labour and so on,” Cavka explains.
For a broker working with a manufacturing client, that creates a broader conversation beyond simple exposure to what could cause the interruption in the first place, how quickly the operation could recover and what happens to the business during that recovery period.
“Insurance may replace property and insurable profit, however, what is the business environment like when you do return to production?” Cavka asks.
Finding the weak point
Every manufacturing process has dependencies. Some are obvious, while others only become visible when something goes wrong.
A business might rely on one particular piece of equipment, a particular utility, a specialist component or a process that cannot easily be replicated elsewhere. A problem in one part of the operation can then create a much larger interruption. For manufacturers, understanding those dependencies is an important part of demonstrating resilience.
“One key aspect is the resilience of their process and understanding what their bottlenecks and vulnerabilities are,” Cavka says.
The underlying point is simple. A manufacturer needs to know what can actually stop the operation, rather than assuming that risk is concentrated in the most expensive asset. This can also change the way a business thinks about recovery.
“Being able to quickly recover from interruption can mean the difference between being down for a few hours or days to months,” Cavka explains.
That difference can be commercially enormous. A manufacturer that has identified its most important dependencies can potentially plan around them before an incident occurs. It may be able to improve maintenance, establish alternative arrangements, strengthen contingency plans or address physical vulnerabilities.
Energy is becoming harder to ignore
Manufacturers also have to contend with pressures that sit outside traditional discussions of physical damage. Energy costs are one example.
“Energy costs and their impact on local sites, plus the supply cost of raw materials, are key pressures manufacturers are facing,” Cavka says.
Energy is particularly relevant to businesses whose processes depend heavily on electricity, heat, refrigeration or other energy-intensive operations. At the same time, increases in raw material costs can affect the economics of production before a physical loss happens.
For brokers, these pressures can make understanding the client’s operation more important. A manufacturing business is not simply a building containing machinery. Its exposure is shaped by how the plant operates, what it consumes, what it produces and how dependent it is on individual parts of the process.
That is part of the reason a standardised approach can become less useful as manufacturing complexity increases.
The middle of the market There is a particular challenge for manufacturers that sit between the small business end of the market and Australia’s largest industrial operations. They can have sophisticated production processes and significant exposures but may not have the internal resources to maintain a large risk management function.
“Having an insurer that can understand a manufacturer’s business and exposures [has been a challenge for brokers and manufacturers]. Smaller complex manufacturers may also not have the scale to implement risk management internally,” Cavka says.
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Published 7 Sep 2026
“The loss you don’t have and never have to recover from helps you keep and grow what you have worked so hard to build”
Antony Cavka,
FM
Who it’s for
Manufacturers across a broad range of risk maturity levels
Those that prioritise risk-improvement ambition over strict cutoffs
Coverage structure
Market-compatible coverage, adjustable lead capacities
Supports full-capacity or shared/layered placements
Quick quote turnaround, fast-tracked claims
Source: FM
Source: FM
The hidden costs of downtime
Reputational damage
Loss of market share
Loss of skilled labour
Weakened customer relationships
A harder path back to the market position held before the interruption
That creates an opportunity for a different type of relationship between manufacturer, broker and insurance provider. The manufacturer brings detailed knowledge of its own operation. The broker brings an understanding of the insurance market and the client’s wider risk needs. A provider with engineering capability can then bring another layer of technical expertise to the discussion.
“Having a carrier that can do this and help them build resilience is a winning combination,” Cavka adds.
What FM Essential adds
FM Essential brings FM’s engineering capability into a segment where businesses may benefit from specialist risk identification and mitigation but do not necessarily operate on the scale associated with FM’s largest industrial clients.
“FM Essential brings the power of FM Engineering into this market segment where we can work with businesses to build resilience,” Cavka says.
The significance is in the combination of cover and engineering input. “Coverage is one thing, and there are many options there. However, coverage with included risk identification and mitigation solutions builds resilience,” he adds.
For a manufacturer, that can mean the insurance conversation is connected to the physical realities of the business. A broker can ask where the client’s production bottlenecks are. What happens if a particular piece of equipment fails? Which parts of the process cannot be substituted? How long would it take to restart? What could cause a loss that would not necessarily be obvious from looking at the balance sheet?
Those questions can help turn resilience from a broad management concept into a practical discussion about the plant.
The loss that never happens There is an economic paradox at the heart of risk management. The most valuable loss may be the one that never occurs.
A manufacturer that prevents a major interruption does not receive a claims payment. It simply continues producing, serving customers and employing its workforce. That can make prevention harder to measure than recovery, but it can also make it more valuable.
“Resilience helps keep you in business and maintain your current market,” Cavka says.
Beyond getting the machinery running again, a business that retains production may also retain customers, skilled workers and the market position it has spent years establishing.
“The loss you don’t have and never have to recover from helps you keep and grow what you have worked so hard to build,” Cavka says.