When Dwayne Dayley was told his insurance on the anodizing company he owned in Caldwell, Idaho, was being dropped, he thought he was the only one in the industry who had heard those words.
Dwayne Dayley“They said we were being dropped because the industry is too high of a risk,” Dayley says. “We have shopped it with 11 other insurers, and they are all saying, ‘The model says this is a money-losing industry to insure.’”
It turns out that Sapphire Metal Finishing’s owner is one of many who have found it difficult to obtain business and liability insurance for their finishing operations.
- A survey of numerous shops throughout the U.S. and Canada found that they were experiencing very high renewal rates—one shop without any claims says it experienced a 217% increase—or were having trouble finding a carrier to insure them.
- Another shop says its insurance premium shot up from $33,000 to $137,000 in the past year after the carrier insisted they spend on sprinklers in their building. They were also told they needed to spend over $800,000 to add sprinklers.
- Worse, many shops were told the same thing that Dayley was hearing: the risk is too high for finishing and coating operations, and the carriers wouldn’t even offer them a rate.
Dave WachterDave Wachter, the General Manager of Great Lakes Metal Finishing in Erie, Pennsylvania, says the company's rates have remained relatively flat over the past two years. But that changed quickly when his carrier dropped the policy.
“Not including health insurance, we have seen between 0% and 5% increases yearly over the last three years,” Wachter said last week, but a few days later he also received the dreaded news.
“Just found out today that our carrier is not renewing us,” he says. “They don’t want to insure electroplaters.”
See a list at the end of the article on brokers and carriers still working with surface finishers.
Finishers Seeing Huge Annual Increases in Premiums
Jeff Fodge, left, and his son, Matt Fodge, say it has been a "nightmare" trying to obgtain insurance for Gleco Plating.“It’s fricking criminal,” one finisher says of the 175% rate increase they were offered, despite not having claims for the past three years.
Dayley says his agent believes that some insurance companies are using artificial intelligence to generate risk models, and what AI is telling them isn’t good for the shops.
“AI has ‘decided’ that insuring our industry is a bad idea,” he says. “I’m not sure if that is correct, but that is his opinion. We found a high-risk insurer willing to take us at double the rates we have paid since we started as a business, and we have never had a claim.”
For Jeff Fodge at Gleco Plating, the past year has been an insurance nightmare. The Chief Executive Officer at the Rowlett, Texas, facility says their annual renewal period is calendar year, and Gleco’s agent of many years generally starts the process of shopping for new quotes a couple of months earlier, especially if they have had no claims of any consequence.
“Historically, because of some unfortunate claims, we spent a few years insured by ‘non-standard’ policies,” Fodge says. “Generally that means a significantly higher premium.”
Most recently, Gleco Plating had zero claims for 3-4 years and could get a standard carrier to offer an acceptable rate. They had no claims in 2023 and 2024, but when it came time to renew for 2025, the carrier contacted them and said they would not renew the policy.
Fodge says carrier told them, “We’ve determined this is a segment of the market we no longer want to be in,” which left the company high and dry and vulnerable.
“Adding a sprinkler system to our existing, fully compliant buildings would cost $500,000. The insurer says that adding them may reduce our costs but cannot tell us how much per year, so we cannot figure out payback.”
“At this point, no one in the standard market would write our company, and the only option was in the non-standard market,” Fodge says. “We were forced to go with a premium that is 217% higher. Needless to say, I felt robbed and had absolutely no other options. We are trying to absorb as much of that increase as possible, but we must pass some of that along to our customers.”
Fodge says he has learned one thing from the experience: “Next year, I will start my process much earlier, so I have a fighting chance of finding something more reasonable.”
Fire Risk Seems to be The Reason for Increased Rates
Sapphire Metal Finishing offers anodizing and powder coating,. services.Dayley says the reticence shops are experiencing seems to be associated with fire risk. When he searched the Internet for fires and plating/anodizing shops, he found two articles: one about a shop that had rebuilt after a tank heater fire and the other about a shop in India that had also had a tank heater fire.
“All the other finds were about burned parts,” Dayley says. “I wonder if AI is tripping over burned parts in anodizing and conflating that with fires. Maybe we need to stop calling the parts burned when they overheat or melt so software doesn’t think our industry is composed of smoldering rubble.”
In 2023, www.FinishingAndCoating.com detailed how insurance giant Allianz studied fires at European electroplating facilities and determined that over 60% of all fires in electroplating shops were caused by electric immersion heaters. The study found some were left energized during idle periods or were activated by a timer several hours before the beginning of operations.
The Allianz study also reported that in Germany — where roughly 80 fires occur at plating shops each year — the estimate is that over 70% of fires are caused by heating rods or other electrical malfunction.
Jaime MaliszewskiJaime Maliszewski, President of Reliable Plating and Elite Finishing in Milwaukee, says he has had issues renewing their insurance due to extremely high new rates.
He says their rates for property and casualty this year are 2.5 times higher than a year ago.
“The main reason the insurer states is lack of sprinkler system,” he says. “We have concrete walls, floor and ceilings, steam heat, and nothing to burn. Adding a sprinkler system to our existing, fully compliant buildings would cost $500,000. The insurer says that adding them may reduce our costs but cannot tell us how much per year, so we cannot figure out payback.”
Kristin Schmit, Senior Vice President at Brown and Brown, Maliszewski’s insurance broker, says the issue concerns property insurance.
Kristin Schmit“Insurers are generally willing to write the non-property lines of coverage, but don’t want the property due to the large numbers of electrical fires related to heating elements,” she says. “This is forcing platers to have their property insurance in the E&S marketplace, leading to higher deductibles and premiums.”
Schmit says this stance does not impact those platers who use steam instead of electrical heating elements.
“Those companies should make sure that their broker/insurer knows and understands how they are different,” she says.
Carriers’ Insistence on Sprinklers Come at a Steep Cost
A Midwest finishing shop owner says his broker came to him several months ago with not-so-good news.
”They come in about three months earlier and told us right up front there's going to be a problem getting fire insurance this year,” says the owner, who asked not to be identified because they are still working on obtaining a policy.
”We went to over 50 insurance companies to get fire insurance, and none of them would insure us,” he says. “The big reason was our facility does not have sprinklers.”
The owner says he tried to reason with the carriers and told them that everything was according to code when we built the structures, and the city did not require them to put in structures because of the facilities' square footage. He also says about half of their buildings have tanks heated with steam and half with electric immersion heaters. The company is trying to convert all the tanks away from electric heaters and steam, but the insurance company wants them to spend money on sprinklers.
He says the estimate to add sprinklers would be over $800,000.
“ Their whole push is they want sprinklered facilities,” he says. “We are trying to eliminate the sources of fire to stop it from occurring rather than let it occur and then put it out with sprinklers.”
Sav-on Plating says their premium had increased by 15%. “That made it financially unsustainable for a small business like ours.”
He estimates that adding steam instead of electric heaters would cost around $300,000. However, he hesitates to spend that much money if the insurance company still won’t lower his annual premium unless he spends three times more on sprinklers.
“ It's just breathtaking,” he says of the attitude of the insurance carriers about where to eliminate the risks. “You look at these costs, and the insurance companies are inflexible. They are insistent on sprinklers, and I consider it as not to mitigate the source of a potential fire.”
Insurers see the High-Risk Nature of the Finishing Industry.
Chris TriminoIn 2022, Sav-on Plating was notified that its insurance coverage would be discontinued due to the high-risk nature of the plating industry.
Christopher Trimino, Vice President of Operations for the Phoenix plating company, explored multiple insurance providers but was repeatedly told that the plating industry is considered too high of a risk.
“Some told us they could not provide us with a quote,” Trimino says.
As a result, Sav-on Plating engaged a brokerage firm, which placed them with Berkshire Hathaway Guard Insurance Company for the last two years. Upon receiving their renewal quote for 2025, they discovered that their premium had increased by 15%.
“That made it financially unsustainable for a small business like ours,” says Trimino, who sought even further options until they found Pie Insurance, which offers a more affordable rate.
However, their financial rating is lower than what Sav-on Plating would typically consider ideal, raising concerns about the reliability of coverage in the event of a claim.
“This leaves us with a difficult decision: should we opt for a lower-cost policy with a lower-rated insurer, or continue paying significantly higher premiums to ensure coverage for any potential incidents?” Trimino says. But they eventually signed on with Pie Insurance.
George Gatto Jr.George Gatto Jr., President of Chicago’s Gatto Industrial Platers, says they recently had to change its insurance carrier because they were unwilling to insure them. However, their broker did find a company to take them.
He says he began hearing rumblings from others in the finishing industry about insurance problems and feared the worst.
“I started hearing about this late July last year, but we had already renewed our property and liability, so it was not an issue at that time,” Gatto says. “We have always used an insurance broker, and so far, we have not had any notices that our current carrier will not be renewing us. We are about five months away from our renewal, so we will check in and see if they anticipate any issues.”
Francisco Capacho, General Manager of Dixon Hard Chrome in Los Angeles, says they have two insurances: business — which covers fire and damage — and pollution. He says the broker that helps them with pollution cancelled the insurance last year at the time of renewal but somehow managed to renew it again at the same price.
Francisco Capacho“It was probably because he has a good and long-term relationship with the insurance, but he mentioned that will be harder and expensive this year,” says Capacho, whose shop is owned by a larger parent company that has an umbrella policy for all their entities, which he believes helps.
“For our business insurance — since we are part of a group of companies — I believe they made a good deal to keep all the companies, but we are the only plating company,” he says. “However, with all the fires, I expect a raise this year, but I’m not sure yet.”
George LaCapra Jr., President of UniMetal Surface Finishing in Thomaston, Connecticut, says he is preparing himself for what could be a major financial hit when he goes to negotiate new rates this year.
“My renewal is coming up in May, so I don’t know yet,” LaCapra says. “I have heard the same thing from other platers locally. Last May, I didn’t have an issue, but my broker did say it is becoming increasingly difficult to insure our industry.”
Insurance Agents Say Increases are Across the Business Spectrum
Kirk LoweKirk Lowe at GIA Insurance insures Houston Plating & Coatings and says the insurance market has seen annual increases across most lines over the last few years.
Since 2023, Houston Plating & Coatings has seen insurance rates rise by only 2%.
“This is an industry-wide complaint,” Lowe says. “We have also seen carriers exiting the market, and a few have gone insolvent. It can be tough to place for the finishing industry due to a lack of understanding of the processes. We have also heard that capacity has come back into the insurance industry in January this year, and we should be starting to see some underwriting and pricing relief in these increases.”
He adds that the insurance market has been in a ‘hard market’ since COVID-19, with a lack of available capacity and rising claims costs due to skyrocketing lawsuits and court awards caused by social inflation.
“When a hard market stage happens, carriers have less capacity to sell and are far more restrained in their guidelines,” Lowe says. “This is driven by the purchase price and availability of re-insurance that carriers must buy to support the risks they underwrite – a basic supply and demand dilemma.”
Ed Witkowski, President of Stanley's Insurance Agency in Chicago, insures several electroplating and anodizing operations in the northern Illinois. While premiums are up across all businesses, he has seen the finish industry be especially difficult to cover.
“It is a tough market for those guys right now,” Witkowski says. “We're having difficulties on properties in general, so I wouldn't say that finishers are being singled out by any means. But in the same vein, they haven't been too profitable for property risks from an insurance perspective.”
“The owners went out to shop the cost and rightfully so when you're getting double premium hikes on some people.”
He says finishers generally work in older buildings, which can concern some carriers. These buildings usually do not have sprinklers, which is often a red flag for insurance companies.
Witkowski says he lost some of the metal finishers’ clients when they decided to shop with national brokers, but he doubts they received a better offer than what he quoted them. He says most carriers will provide the same premium costs no matter who asks, and fewer carriers are willing to provide a quote.
”The owners went out to shop the cost and rightfully so when you're getting double premium hikes on some people,” Witkowski says. “Carriers are letting them go, and no one wants to insure them. One of our main carriers just took the whole book and just said, ‘We're not doing metal finishers anymore.’ But we’ve got to find alternative outlets, and it’s not the easiest right now.”
Some Shops Have Seen No Increase or Even Cost Reductions
Andy Le FriecSome shops say they are not having as much trouble getting insurance for their businesses as others.
Andy Le Friec, owner of Novation, an anodizing and plating operation in Spokane Valley, Washington, says their increases have been below what he would expect to pay. But he says insurance rates will skyrocket, and the California fires will worsen it.
“We have had Increases of around 10% per year, but I know lots of businesses who can’t get a quote,” Le Friec says. “I’ve experienced the situation firsthand in my personal life: the carrier on my lake cabin dropped me last month, and other companies are refusing to quote. In my work life, I’m happy to have a hassle-free carrier and eat the extra cost without complaining.”
Jessica Famiglietti YoungJessica Famiglietti Young, President of Vegas Metal Finishing in Nevada, says they have not experienced any issues with insurance over the past few years.
“Our rates seem fair, and we haven't had any issues renewing our policies each year,” she says.
Stacey Bales, President of Bales Metal Surface Solutions in Downers Grove, Illinois, says premiums have only slightly increased over the past few years and have decreased.
They had a 5% increase in 2022, a 3% decrease in 2023, a 5% decrease in 2024, and an 11% increase in 2025.
“We have seen the property and auto insurance costs increase the most in recent years, but that seems to be the new norm in business and residential due to national disasters and increasing claims,” Bales says. “Our other policy cost increases have been due to increased sales and increased payroll expenses, which is used to calculate work comp premiums.”
Stacey BalesShe says their broker, Daniel & Henry, and their workers comp carrier have helped Bales institute an on-site safety training program and regular safety audits.
“This has helped increase our safety awareness, prevent accidents and keep our experience mod very low 0.76,” Bales says. “This results in credits on our work comp insurance.”
Master Finish President John Mulder said his Grand Rapids, Michigan, company has not seen as dramatic an increase as others.
“Business liability insurance is on the rise everywhere for everyone in plating or not in plating due to catastrophic events from hurricanes, flooding, and fires causing major losses in the industry,” he says. “We have not seen anything out of the ordinary; we did get a rate hike, but we should expect it on all commercial property due to national loss events.”
Ed Ball, Vice President of Sales and Marketing at Metal Finishing Co. in Wichita, Kansas, says his company saw property and general liability insurance increase less than 10%.
““We did not have trouble with our last insurance renewal, which occurred in December,” Ball says.
John MulderAllan Phillips, owner of Active Metal, Bristol Powdercoat, and the Metal Finishing Center in Toronto, says the situation in Canada is not at the same difficulty level, but adds, “Yet.”
“We just renewed,” he says. “It is possible to still get insurance at ever higher rates. Also, insurers are pushing liability insurance, especially for owners/directors.”
Glen Attridge, Co-General Manager at West-Tech Finishing in Ontario, says that because they don't use aerospace finishes very often, they haven’t had any insurance issues.
“That being said, I’m sure many of the Nadcap companies are having issues with coverage, at least from what I’ve heard,” Attridge says.
Workers Comp Premiums Also Rising for Finishers
Greg WoodGreg Wood, owner and CEO of Alpha Metal Finishing in Dexter, Michigan, has had fairly stable liability insurance. However, a change in workers’ comp rates has impacted him more as his carrier auditor reclassified all his employees into one category instead of two.
His employees working in the process/tank side were typically under a higher rate, and the employees on the production floor — rackers, packers, and other employees — were switched from a lower category to being considered working near tanks and apparatus, which resulted in a hefty raise in workers comp premiums.
“Over the last few years, worker’s comp has been charging us more and more because they see us as a high-risk category,” Wood says. “Do we have any claims? None. Workers’ comp insurance carriers will quote you based on different categories and risk codes to get your business. Still, at the audit, they categorize all of our team, except admin, under the same risk modification.”
He says that process line operators are exposed to chemicals and have a higher risk, but the racking and packaging teams are now being grouped with the operators.
“This was not the case for many decades,” says Wood. “And, what’s frustrating is that none of our production team is exposed to hazardous chemicals. However, the revised class code for electroplating says they are, which is not true. The result is that most of my premium, based on payroll, is now placed in a high risk category, even though there are no claims or evidence to support this.”
“I don’t think I am alone in my disdain for the insurance industry,” Greene says.
“They are using the electroplating verbiage and anodizers are grouped in with it, which I believe is incorrect,” he says. “Anodizing is very environmentally friendly and needs to be its subset of electroplating.”
Wood says, “Our costs for mandatory insurance across the board continue to climb due to higher premiums that appear to be above other industries. When you are a smaller finisher like we are, it greatly impacts your bottom line, and we have to pass those costs onto our customers.”
Join Together to Reduce Costs? The Question on Whether to Form a Captive Group
Douglas GreeneDouglas Greene, President of Hixson Metal Finishing in Newport Beach, California, says he “absolutely hates all forms of insurance,” and not just because of the rising costs.
“I don’t think I am alone in my disdain for that industry,” he says. “It is wrought with incompetence and an ever-changing landscape. Of course, to add to that, there is no such thing as cost ever going down.”
Greene approaches insurance as a risk/reward proposition. While every company must have insurance, he says there are ways to make it feel like “you’re getting something for your money " while keeping costs from rising compared to the standard open market.
Hixson Metal Finishing has been in different forms of self-insured programs (captive programs) for many years. Greeene started with his workers comp in 2002 with a homogeneous captive in Southern California that included eight companies that came together to form a group.
“It was extremely successful,” he says. “So successful our premiums kept going down year after year to the point where we were too small to be insurable by the reinsurance industry.”
Greene found another heterogeneous captive and joined them in 2008. At the time, the captive comprised approximately 60 companies, mostly convenience stores, long-haul truckers, and the building supply industries. He says the captive only provided workers’ comp insurance until about six years ago, when it decided to expand into general liability and auto insurance and maintain the workers’ comp side of the market.
“I can tell you that the captive insurance market is a bit complicated, and you have to pay an entry fee in the form of preferred and non-preferred stock,” Greene says. “For some people, it is very difficult to get their head around the inner workings of a program like this, but once you do, it becomes fairly simple.”
“It’s one-for-all and all-for-one,” Donahue says of a Captive Group. “A devastating loss by just a few members can impact the pricing on all members nationwide.”
He says that for a self-insured captive program to be successful, all members must be active and participate in the ongoing activities. They must also be willing to accept a certain amount of risk beyond a set dollar amount, i.e., risk sharing among the members.
“In the earlier years, I was in charge of the risk control committee and was extremely active in designing and implementing different programs and processes to ensure that all the members continued to participate and drive workers comp down and thus reduce expenses for the group,” Greene says. “One drawback to a captive is — depending on the captive — a member has to have a certain amount of spend for their insurance products.”
He says the captive is at 264 member companies and nearly $400 million in insurance premium renewals.
Captive Groups Could Reduce Premiums, But Do Have a Risk
“The success story here is that my workers comp cost today is cheaper than it was 17 years ago with approximately 25% more covered employees than it was when I started the program in 2008,” he says. “I have calculated that had I been in the open market, my workers comp would be at least four to five greater than it is today.”
Greene cautions that an owner should not write the check and sit back and see what happens; he suggests that you write the check, engage with all other member companies, and do real things in your company to reduce injuries and the costs associated with those injuries.
“I have general liability as well as auto in the captive, and those costs have also been maintained with very slow increases in policy costs,” he says. “I want to move my medical away from the open market and place that business within the captive. We’ll see what that looks like in my next renewal in July.”
Greene says those cooperative programs “are not for the faint of heart,” nor are they for an inactive president or CEO to be involved in the insurance game.
“However, based on my experience, it is the single thing you can do to get control over an uncontrollable aspect of your business and at the same time if not lower, at least maintain insurance costs,” he says.
Tom Donahue, President of Ranger Business Insurance Services that insures Palm Springs Plating in California says self-insurance or forming a captive group of platers — while nice to consider to save some premiums — may not be a worthy, sustainable venture.
“It’s one-for-all and all-for-one,” Donahue says. “A devastating loss by just a few members can impact the pricing on all members nationwide.”
“It takes internal administration. And you lose the benefits of a larger risk pool, leaving you more vulnerable to catastrophic events.”
Master Finish’s Mulder adds that getting a plating captive to pool their insurance plans is “interesting to consider,” but not sure it would work for everyone involved.
“I think it would take a talent to pull people into a captive for the industry,” he says. “Many captive insurers are typically looking for larger companies and risk pools to be able to balance. Insurers all in one industry would face risks that would be lesser with pools of companies in a variety of industries. The plating industry has a lot of smaller shops that would be difficult to pool into a captive of larger shops.”
Ken HoffmannKen Hoffmann, President of Palm Springs Plating, says they were able to get insured for 2025 and exit the California State Fund. However, he saw a 4% increase in costs this year.
“My agent was even able to shave off a few dollars,” Hoffmann says. “Part of that is the structure that we built that calms down insurers, with the help of my long term insurance agent.”
GIA Insurance’s Lowe says forming an electroplating cooperative to save on insurance might involve too much risk for some shops.
“There are some positives and negatives in self insurance,” he says. “On the plus side, you can get cost savings, more control and flexibility to tailor the coverage, and it helps with cash flow management since you are only paying out when a claim happens instead of a steady annual premium that is required.”
On the negative side, Lowe says serious financial risk can be involved due to unpredictable significant losses.
“It takes internal administration,” he says. “And you lose the benefits of a larger risk pool, leaving you more vulnerable to catastrophic events.”
Finishing is a ‘Tough’ Type of Business to Run
One shop in the Northeast says they have a long-time insurance provider that has worked well with them over the years and understands their business and who they are. They have never put in a claim, and the rates go up yearly, but they do not shop around for fear of “rocking the boat.”
“The issues are real for our industry,” says the owner, who asked not to be identified. “The key is to establish a good relationship with insurance folks, especially if you have a broker that can help with this. Insurance brokers often have pull and established relationships with insurance companies and can bridge the gap with the disconnect there could be between plater and insurer.
He says too many people in our industry are “trying to save a buck and lose focus on the volatility of some situations,” whether it be metal prices, product purchasing, or insurance policies.
“There is more to running a metal finishing shop,” he says. “Those are the old days and are no longer here, in my humble opinion.”
Alan HenryAlan Henry, owner of ChromeTech of Wisconsin, has had his share of battles with insurance companies and has jotted down a few lessons learned over the years.
“We are in a tough type of business,” he says.
Henry offers up this list of suggestions for finishing operations based on his own experiences:
- Be in an industrial park: “Many plating shops have residential areas. They can complain about anything, and they do. If you have a problem, you might make the news.”
- Don’t use electric immersion heaters: “Way cheaper to get into for heating tanks, but cause a lot of fires. We had one on a poly EN tank arc (common problem) and blew a 2-inch hole through the tank above solution level. A quick-thinking operator shut down power, and the tank did not burn. I think the combustion temperature on a poly tank is only 600° The fumes given off destroy all electrical. It’s a big cost.”
- Sprinkle your building: “Most plating shops I have seen —especially the older ones — are not sprinkled. That is bad for insurance. Our first building wasn’t sprinkled; when we put an addition on, we had to sprinkle that but could leave the other unsprinkled. Knowing some things that had happened to others, we sprinkled the whole building. You can find companies that will do it over existing equipment.”
- Keep the place always clean: “There is a cost, but in the long run, it saves money. You can’t have the place look bad, have chemicals, people without uniforms, and open containers.”
- Insurance companies want to make money: “When they see plating shops with both conditions, they are shying away. Without insurance, good luck getting loans.”
Henry hopes insurance carriers will still talk to shop owners instead of using computer models to forecast premiums in the finishing industry.
“I hope they aren’t using AI, or we may all be easier to discard,’ he says. “That is, until they need plating.”
Here are some insurance brokers and carriers who continue to work with electroplaters and anodizers:
- Daniel & Henry, connected through Illinois Technology & Manufacturing Association
- Chubb
- Loesel-Schaaf Insurance Agency
- Continental Western
- Ranger Business Insurance Services
- OVD Insurance agency Grand Rapids, MI
- Stanleys Insurance Agency (Chicago)
- Libert Insurance, which has its own plating insurance program: https://libertyinsurance.com/business-insurance/electroplaters-program/
