A significant percentage of the semiconductor industry likely lacks extreme weather protection, an issue highlighted in a recent survey by re/insurance broker, WTW.
The Global Semiconductor Industry Survey also highlighted that gaps in cover could prove costly as extreme weather increases. It noted that one of the main challenges companies face when trying to purchase the right property insurance cover is the lack of available capacity.
Transformative technologies powered by semiconductors are driving rapid change and progress in many areas of life, from electric cars to mobile devices. At the same time, semiconductor makers are facing pressure to meet increasingly complex and changing end product requirements from customers.
The survey said: “As rising political and economic instability comes hard on the heels of the pandemic, bringing further disruption, our survey suggests that businesses may not be as resilient to shocks as they would wish.
It adds: “Any weak link in the chain can undermine the industry’s capacity to keep pace-named as a top risk by 44% of the respondents.”
According to the survey, companies in high risk areas said they were unsure if they are covered for property damage caused by extreme weather events, this becoming one of the main challenges the semiconductor industry faces.
The survey said: “Given that semiconductor manufacturing is clustered in high-risk regions, it’s concerning that less than half (46%) of businesses said they have cover that ensures extreme weather in the supply chain would not have a serious impact on their business.
“Just over half (51%) indicated that they have some cover, but are unsure if it is sufficient.”
They survey found that even in Asia-Pacific and North America, where extreme weather has historically impacted semiconductor manufacturers, 67% and 41% respectively, admit they are unsure if they are fully covered by insurance.
WTW advises semiconductor businesses to reassess the critical issues in their business, where they need to focus, how they can manage the key risks they face, and where they might need more protection.
