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Food Manufacturing and Artificial Intelligence: Insurance Considerations
6 min read
August 9, 2022
Food Manufacturing and Artificial Intelligence: Insurance Considerations

Artificial Intelligence and Food Manufacturing are two compounds that make the entire process of food manufacturing and delivery more accessible, cleaner, and more effective while delivering top-shelf products.

Besides the food quality control, another revolutionary trait of the AI in food manufacturing is the ability to contribute to the increasing food demand as a post-pandemic result. AI works faster, is less expensive, and doesn’t get tired.

Although the advantages can pile up, the slightest AI mistake can disrupt the entire food chain or cause financial setbacks. Food factories embrace AI support, but they also face a lack of food manufacturing insurance policies protecting their businesses when using AI.

Below, we break down the ways AI supports the food manufacturing businesses and how insurance policies respond to the demand. 

Food Manufacturing & Artificial Intelligence

Artificial Intelligence is a proven game-changer in all industry sectors thanks to its versatile commands to wrap up any given task. Food manufacturing is not excluded from the industries implementing AI to simplify and fully optimize the manufacturing process. 

Specifically, AI improves the food quality control in terms of:

  • Hygiene – there are many AI systems that control employees’ hygiene habits, like washing their hands if they are not clean enough. The embedded sensors can comprehend the way to appropriately wash hands by memorizing the number or registered turns of the hand. If the system registers the set number of hand turns while washing the hands, it will report clean and quality-controlled food;
  • Food Processing – The e-noses replace the human's smelling sense on the line as products move on. Apparently, e-noses can distinguish a foul odor from a good one and replace the harmful effects with high-end quality ones;
  • Supply chain food quality – Robots can successfully manage the responsibility for delivering food to the customer. For example, put the food into a car ready for delivery once the food is prepared. After all, offering quality food to customers is the objective of the food manufacturing business.

According to food quality experts, these are the cornerstones of food manufacturing supported by AI. But are there any risks associated with implementing an AI-powered tool? 

Risks of Implementing AI in the Food Manufacturing Industry

AI is one of the latest technologies that can perform simple and complex tasks while learning and picking environmental habits on its own. However, regardless of its latest updated model - it's still a machine following commands. And there's the trouble.

Blindly following commands is an excellent way for third-party users to sabotage a supply chain or unplug the entire company. The text below discusses the risks any AI-powered food manufacturing business can face.

Cyberattacks

Any AI-supported business is a possible target to hackers. According to Cybersecurity, 2020 witnessed 40 identical cyberattacks in the food and beverage businesses. Some food or beverage giants can afford to implement robust systems in their network and protect themselves internally.

But, not everyone can afford to have the latest cybersecurity system, and the personal data breach, business secrets breaches, and digital theft are only the tip of the iceberg here. Another liability that might be fatal to your business is breaching the commands and control of the robot. If a hacker accesses this area, they can just as quickly redirect the robot and cause fatal consequences for you. 

However, sometimes these perils come unexpectedly. Namely, Nestle Waters North America underwent an accident where an AI forklift got on fire while connected to a power outlet. After the fire, the company had to dismiss over 50 vehicles and later filed a lawsuit against the forklift manufacturer.

 

Accidents and Injuries

Working with a robot is fun and cost-efficient because it replaces the work of at least two employees and boosts the company's revenue without getting tired. However, businesses are already aware that the food industry bears the responsibility of food quality and control to allow themselves to rely on robots entirely. Hence, a hybrid of humans and robots is the ideal combo for properly getting more jobs done.

But, this combo can be fatal for the life of a given employee. Like self-driving trucks, forklifts, or other machinery or tools, AI robots can cause catastrophic injuries to employees, like handicapping the employee, scarring them, or even costing a worker their life.

Therefore, having proper protection like an Employee Liability policy covering accidents and illnesses under your company's roof is highly important and recommended. It shows compassion to your employees.

AI-Supported Food Manufacturing Businesses Insurance Policy's Response

Luckily, insurance policies identified the possible liabilities coming along with AI Food Manufacturing businesses. Also, insurance policies noticed the growth of interest in ensuring these businesses.

Although the insurance plans vary from one insurance policy provider to another, if you're an owner of a food manufacturing business, then you should not think twice about attaining an all encompassing food manufacturing insurance.

Types of Insurance for Food Manufacturing Utilizing AI

Thanks to the expanding industry of food manufacturing and AI-powered tools, insurance companies have devised several insurance plans to offer in the case of mishaps. 

  • General Liability: This covers any liability against your business, including but not limited to product liability, errors, product faults, cyber liability, and omissions; 
  • Business Income Insurance covers property damages, and it will replace any costly damage under your roof with a rate as per the plan; 
  • Business Auto Insurance applies to businesses dealing with product distribution. If that sounds like you, you'll get auto coverage needed in case of an accident;
  • Equipment Breakdown Coverage: If your AI-powered equipment suffers malfunction or damage, you have coverage to prevent further financial leaks. The Equipment Breakdown Coverage applies to any engines or computers used in your company or factory;
  • Worker's Compensation - This insurance policy covers your employees. In case of an accident or injury during your employee's work shift, they will receive financial compensation for medical expenses;
  • Professional Liability applies to all experts under your company, from their service to clients or customers. In the case of a faulty product, the employee is safe from all the lawsuits and legal costs that might happen afterward.

Food Manufacturing, Artificial Intelligence & Insurance Costs

Every coverage plan differs from one another, and so do the costs. There isn't a fixed price for the food manufacturing insurance business supported by AI. 

However, the basic plan, i.e., the General Liability coverage costs around $40 monthly, whereas the premium plan covering the Basic, Product Liability, and Workers' Compensation might reach $100 a month. Any additional or customized coverage plans come with an additional estimated price, arranged with your financial broker. 

A bonus tip: keep an eye out for the buddle opportunity. Many insurance policies offer various discounts for getting new insurance, and you might get a great deal out of this.

Who Can Make Use of Food Manufacturing and Artificial Intelligence Insurance?

The insurance policy for AI-powered food manufacturing companies applies to any business regardless of its size - damage is damage to both big corporations and smaller businesses.  

Any company that utilizes AI for the process of food manufacturing can highly benefit from having food manufacturing insurance. The risks are evident - many companies underwent difficulties on a financial and time-consuming note because they lacked to consider food manufacturing insurance.

Therefore, any business, small or big, is strongly advised to create a business risk profile before filing for insurance. If you fit the profile of a business owner operating on AI-powered tools or machinery, overlooking food manufacturing insurance is a no-no. 

Once you begin the process of acquiring insurance for your business, find an experienced broker and discuss your company’s needs, and they will find a suitable plan or create one on the spot.

Whatever you do, never opt for the cheapest coverage plan, especially if you plan on growing your business. Choose any insurance option other than the Basic Plan since that one will only cover the basic needs. With an all-encompassing food manufacturing insurance under your belt, you can rest assured your company will strive no matter the bumps on the road to success. 

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Tyler Crawford
by Tyler Crawford
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