Manufacturing Risk & PE Value Creation

Nick Downing, CLCS

9 Years Insurance Experience
Manufacturing Risk
HUB International

I help manufacturers reduce workers' compensation costs and volatility by tightening claim closures and reserves, improving loss performance through disciplined loss analysis and risk control implementation, and driving sustained improvement in Experience Mods. I pair that work with class code optimization and thoughtful program structuring, then create leverage through competitive carrier negotiations—producing immediate savings, stabilized cash flow, and durable EBITDA improvement for both operators and their private equity partners.

The Heart of Manufacturing Risk

Workers' Compensation: Where EBITDA Leaks First

Most manufacturers don't really understand how workers' comp is rated—and to be honest, most insurance agents don't either.

Workers' Comp in Plain English

Your workers' comp premium is based on three things:

Payroll

How much you pay employees

Class Codes

What type of work they do

Experience Mod

Your claims history vs. peers

Your Experience Modification Rate (E-Mod) measures how often and how severely employees are injured at your company compared to similar companies in your industry and state.

0.65

Elite performance

0.85

15% better than peers

1.00

Industry baseline

1.25–1.50

High debit. OSHA scrutiny.

>1.50

Non-renewal risk. Assigned risk pool.

Moving from 1.00 to 0.65 = 35% reduction in workers' comp premium—before negotiating anything.

Low Mod = Control

Broader carrier market
Competitive base rates
Negotiation leverage

High Mod = Trapped

State fund / assigned risk
No discounts, higher rates
Upfront premium required

3 consecutive good years can get you to the green. 3 consecutive bad years can get you to the red.

The Approach

How You Actually Take Control of Your Workers' Comp Costs

Class Code Review & Payroll Audits

Many times it's overlooked that a portion of your payroll—quality control, clerical, engineering—is actually rated in a higher-rated class code such as manufacturing or fabrication. Correct coding frees trapped premium dollars.

PE Impact: One of the fastest ROI moves post-close. Immediate bottom-line improvement.

Experience Mod Strategy

Mods are multi-year averages. You manage them intentionally through:

Reduction of bloated claim reserves and closing out open claims
Loss analysis and stratification
Implementing targeted risk control to drive better claims performance

PE Impact: Predictable, improving cost structure. Clear value creation narrative for exit.

Market Knowledge & Underwriting Negotiations

Once you take control of your E-Mod, I know which carriers want the risk and what loss stories they'll accept. Leveraging a good story with documented risk control and safety measures in place creates leverage for aggressive negotiations on behalf of my clients.

PE Impact: Better terms, broader carrier access, and pricing that reflects the risk you've worked to improve.

Alternative Risk Financing & Program Structures

For the right manufacturers, traditional guaranteed-cost insurance is inefficient. I help evaluate large deductible programs, loss-sensitive structures, and workers' comp captives.

PE Impact: Lower long-term TCOR, improved cash flow predictability, and leverage at renewal and exit.

Proof, Not Promises

Manufacturing Results

EMOD points reduced = percentage of workers' comp premium reduced. Directly.

Power Generation

1.38 → 0.86

52-point reduction = 52% workers' comp premium reduced

$175,000 in annual savings at a 14% profit margin = $1.25M in equivalent earned revenue

HVAC Manufacturing

1.41 → 0.95

46-point reduction = 46% workers' comp premium reduced

$210,000 in annual savings at a 12% profit margin = $1.75M in equivalent earned revenue

Aerospace Components

1.18 → 0.82

36-point reduction = 36% workers' comp premium reduced

$126,000 in annual savings at an 18% profit margin = $700K in equivalent earned revenue

CNC Machining

1.33 → 0.88

45-point reduction = 45% workers' comp premium reduced

$255,000 in annual savings at a 15% profit margin = $1.7M in equivalent earned revenue

For Deal Teams

Private Equity Value

Risk optimization that translates directly to EBITDA and exit multiples.

Cleaner diligence with controlled loss runs and improving E-mod trends
Stabilized EBITDA from insurance as a managed expense
Freed trapped capital through reserve reductions and program restructuring
Improved exit optics with three years of documented improvement

M&A Support Services

Buy-side insurance diligence
Reps & warranties insurance placement
Post-close insurance integration
Portfolio-wide risk strategy
Seller-side preparation & risk optimization
Carve-out coverage structuring
Add-on acquisition insurance coordination
Exit-ready program positioning

Backed By

HUB International

5th

Largest globally

600+

Locations

18,000+

Employees

$40B+

Premium placed

Manufacturing Practice

19,000+

Mfg clients

$6B+

Mfg premium

Coverages & Products

Property & Business Interruption
General & Product Liability
Workers' Compensation
Umbrella / Excess
Specialty (Cyber, Enviro, Cargo)
Stock Throughput
Product Recall
Professional (E&O, EPLI, D&O)
Employee Benefits
Trade Credit

Risk Services

Compliance Assistance & Gap Analysis
Safety Program Development & Training
Ergonomics & Productivity Improvement
Behavior-Based Safety Programs
Loss Investigations & Analysis
Fire Protection Engineering
Machinery Safety & Equipment Breakdown

Claims Management

Claim Data Analysis & Reporting
Reserve Analysis & Settlement Evaluation
Disability & Litigation Management
Return-to-Work Planning
Subrogation & Second Injury Fund Recoveries

Contract & Risk Transfer

Vendor & Customer Contract Review
Indemnity Language Optimization
Certificate of Insurance Programs
Subcontractor Risk Management
Product Liability Assessments