technology

The high-tech sector and specifically the semiconductor industry demands a high level of knowledge and experience to both understand and measure the exposures and develop appropriate risk reduction solutions.

In addition to the inherent hazards associated with this industry sector, the continued consolidation of companies and operations has resulted in increased single site exposures. Customer dependence and the reluctance of some insurance markets to provide competitive cover means that businesses must make every effort to identify and manage their exposures effectively.

What is at Risk?

A key element to understanding this sector is an appreciation of the values at risk. For example a modern Semiconductor wafer fabrication (Fab) facility could have:

• Property values in excess of $2bn
• Individual equipment values exceeding $10million
• Single fire-area equipment values exceeding $250million
• Work-in-process values in excess of $30million
• Daily business interruption values exceeding $1million
• Associated contingent business interruption exposures often exceeding $250million

Claims history indicates that losses within this sector are on average 3000% greater than those in the general manufacturing sector and that the diversity in production and protection philosophies between organisations and geographical regions can make portfolio analysis difficult and complex.

What is different about the Semiconductor Sector?

The Semiconductor Industry has its own specific risk exposures, which typically include:

• Different production models with different levels of resilience to loss
• Long product development and accreditation lead-times
• Production lead-times often greater than 16 weeks
• Limited internal back up
• The susceptibility of the process to utility interruptions
• The use of pyrophoric, flammable and corrosive liquids and gases
• Susceptibility of equipment and Work-in-Process to smoke and contamination
• Combustible equipment and construction materials
• High levels of competition
• Extreme market cycles

Examining these exposures in isolation is not sufficient to identify the risks presented by this industry. Only through a tailored location to corporate review process can the true picture be revealed and the risks understood.

The technology team within elciem has experience gained from working with many of today's major chip manufacturers. We provide risk engineering resources for sites and accounts as well as offering account risk profiling tools for risk managers and underwriters.