How Natural Disasters Can Affect the Printing Industry

Natural disasters, including hurricanes, create substantial risks and liabilities for the printing industry, impacting facilities, disrupting operations, and straining client commitments. The potential for physical damage, supply chain interruptions, and increased costs requires printing companies to confront new challenges in maintaining continuity and meeting obligations.

As extreme weather events become more common, the industry faces mounting pressure to adapt and protect itself against these unpredictable forces. By leveraging the protection of insurance as a risk management tool, printing businesses can adopt proactive strategies to reduce the liability exposures that natural disasters present.

To learn more about insurance solutions for the commercial printing sector, visit the Printing United Alliance Insurance page.

When Natural Disasters Strike

With its complex dynamic and broad reach, the printing industry encompasses thousands of allied businesses in production, design, supply, and distribution. When a natural disaster, such as the recent hurricanes that hit the states of North Carolina and Florida, becomes a reality, any part of the chain can be affected.

Natural disasters, particularly hurricanes, can significantly disrupt the printing industry. Here are some of the key areas where hurricanes impact printing operations:

1. Facility Damage and Operational Downtime

• Structural Damage: Hurricanes or other severe weather events can cause significant structural damage to printing facilities, leading to broken equipment, flooded production floors, and hazardous working conditions. Facilities may face prolonged closures for repairs and cleanup, leading to operational delays.
• Power and Utility Disruptions: Printing relies heavily on consistent power. Hurricanes, wildfires, and windstorms often lead to power outages, which halt production. This downtime can last for days or even weeks, depending on the severity and infrastructure damage.

2. Supply Chain Disruptions

• Paper and Ink Shortages: Natural disasters can disrupt supply chains by damaging transportation routes, ports, and supplier facilities, causing shortages in essential materials like paper and ink.
• Shipping Delays: Severe weather conditions can delay shipments both to and from printing facilities, affecting order fulfillment and client delivery timelines.

3. Damage to Inventory and Raw Materials

• Hurricanes often bring flooding and/or severe wind damage, which can ruin stored paper and ink due to moisture damage. Printing companies may incur significant costs to replace this damaged stock, not to mention the expenses associated with repairing or replacing critical production and distribution equipment.

4. Increased Insurance Premiums and Risk Mitigation Costs

• Hurricanes raise insurance premiums for businesses in affected regions, as insurers adjust for heightened risk. Additionally, printing companies may need to invest in disaster preparedness measures, such as waterproof storage or hurricane-resistant building materials, which adds to operating costs.

5. Client Relations and Contractual Liabilities

• Delays in print production can strain relationships with clients who depend on timely delivery, such as for marketing materials or publishing deadlines. Failing to meet contractual obligations can result in penalties or loss of business.

6. Employee Safety and Workforce Shortages

• Ensuring employee safety during hurricanes may require temporary closures or delayed reopening, as travel to and from facilities may be unsafe. After a disaster, employee availability may be further impacted as workers address personal recovery and family obligations.

7. Operational Shifts to Digital Solutions

• With the increased frequency of natural disasters, some printing companies may consider diversifying into digital solutions to offset the risks associated with physical production. However, this shift can require substantial investments in new technology and training.

Addressing these risks proactively with business continuity plans, insurance, and flexible client contracts can help printing companies weather the impacts of hurricanes and other natural disasters more effectively.

A Protective Shield: Liability Insurance for the Printing Sector

It is no secret that businesses of every size and type rely on some form of commercial insurance to protect against risks. The printing industry is no different. However, printers and their supply chain/distribution partners may face unique risks that are only exacerbated by natural disasters.

To select the right insurance coverage against natural disasters like windstorms, wildfires, and hurricanes, a printing company should evaluate its specific risks, operational needs, and budget. Here are essential steps to guide this selection:

1. Assess Facility and Location Risks
   Conduct a risk assessment based on the location and structure of the facility. Companies in hurricane-prone areas, for example, may need higher windstorm and flood coverage, while those in wildfire-prone regions should consider coverage for fire and smoke damage.
2. Consider Business Interruption Insurance
   Business interruption coverage compensates for lost income and ongoing expenses during periods of downtime following a disaster. This coverage is particularly important for printing companies that depend on uninterrupted operations to meet deadlines and contractual obligations.
3. Protect Equipment and Inventory
   Printing equipment and raw materials like paper and ink are costly and susceptible to damage. Property insurance should cover physical damage to equipment and inventory, with additional endorsements for water damage, if relevant. Policies should consider the replacement costs rather than the depreciated value to ensure full recovery.
4. Review Supply Chain Insurance Options
   Given the printing industry’s dependence on timely supply chains, contingent business interruption coverage can protect against losses if suppliers are impacted by a disaster. This is especially valuable if paper or ink suppliers are in high-risk areas.
5. Negotiate with Insurers for Tailored Coverage
   Work with an insurance agent or broker who specializes in commercial property and disaster-related risks to build a customized policy. These experts can often secure tailored endorsements, such as coverage for debris removal or temporary relocation, which can be crucial for a speedy recovery. Insurance companies focusing on the printing sector also have the industry knowledge needed to understand unique or emerging risks facing their clients.
6. Evaluate Policy Exclusions and Deductibles
   Policies often exclude certain disaster-related damages or may have high deductibles for events like hurricanes. Clarifying these exclusions and adjusting deductibles to manageable levels ensures the coverage is realistic for the company’s risk profile.
7. Explore Specialized Disaster Coverage
   If standard commercial property policies exclude certain natural disasters, consider supplemental coverage, like flood or earthquake insurance, to fill those gaps. While an added expense, these policies can make a significant difference in disaster recovery.

By carefully assessing their risk exposure and working with a knowledgeable insurance professional, printing companies can build a comprehensive coverage plan that minimizes financial losses and ensures a more resilient response to natural disasters.

To learn more about insurance solutions for the printing sector, visit the Printing United Alliance Insurance page.

In this article, David Campbell, Chief Underwriting Officer at USI, addresses how natural disasters can affect your business. USI is an insurance broker that administers the PRINTING Alliance Insurance Program, a valuable member benefit and resource to PUA members. To become a member of the Alliance and learn more about how our subject matter experts can assist your company with services and resources such as those mentioned in this article, please contact the Alliance membership team: 888-385-3588 / membership@printing.org.