Capital Equipment News October 2024

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Machinery breakdown: mitigation and preparation

Any business relying on machinery and equipment for its operations is exposed to the probability of significant financial losses due to a breakdown of a key piece of machinery that isn’t quickly or easily replaced or repaired.

A ccording to the Market Statsville Group (MSG), the global equipment breakdown insurance market size is expected to grow at a combined annual growth rate of 11,7% from 2023 to 2033, whilst Precision Reports has recently published a report titled “Equipment Breakdown Insurance Market”, echoing the expectation, stating that “The Global Equipment Breakdown Insurance market is anticipated to rise at a considerable rate during the forecast period, between 2024 and 2032”. According to Bester Els, Business Unit Manager - Operations at Aon South Africa, the equipment breakdown insurance market is driven by an increasing reliance on sophisticated machinery and equipment across various industries, often involving intricate components and advanced technology, making them more vulnerable to breakdowns or failures. “Such incidents can lead to significant financial losses for businesses, including repair or replacement costs, downtime, interruption in production and service delivery, brand

reputational damage and at worst, even serious or fatal injuries to operators, among others,” says Bester. However, not all losses relating to machinery or equipment breakdowns are covered by a standard machinery breakdown policy, which normally includes a ‘sudden and unforeseen’ requirement. “Post-loss investigations often reveal that the breakdown was due to gradual deterioration and wear and tear, which the business may or may not have been aware of, which may result in the insured being unsuccessful in obtaining indemnity for its loss in terms of the machinery breakdown policy. It is imperative to understand the importance of equipment breakdown mitigation and preparation and to take proactive measures such as implementing a formal risk management programme in conjunction with machinery breakdown insurance, to minimise the risks associated with such incidents,” Bester explains. Cue the age-old adage ‘Prevention is better than cure’. A machinery and equipment breakdown prevention and contingency plan should

The equipment breakdown insurance market is driven by an increasing reliance on sophisticated machinery and equipment across various industries, often involving intricate components and advanced technology, making them more vulnerable to breakdowns or failures.

Bester Els, Business Unit Manager - Operations at Aon South Africa.

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CAPITAL EQUIPMENT NEWS OCTOBER 2024