WITH the UK experiencing its worst-ever outbreak of avian influenza, many farmers are considering how they might protect their business in the event of an outbreak.
Here, Andy Dutton, client director at DRP Insurance Brokers, offers answers to some of the most common questions that his clients are asking about avian influenza cover.
Does my policy pay for the dead and diseased birds that the APHA don’t pay for?
Yes, if your farm is subject to government enforced slaughter then insurers will pay for the birds that die as a result of the disease and those that are classified as infected by the APHA.
With the APHA paying compensation for the healthy birds, the sum of the two payments should give you 100% coverage for the value of the flock affected.
Does my policy cover the secondary Cleaning & Disinfection costs including the removal of the Litter?
Most policies include this cover as it’s a fundamental part of the coverage.
The limit will vary from site to site, depending on the site’s size and complexity.
The important thing is that the cover is for the increased costs of secondary cleaning & disinfection so insurers can deduct the normal cleaning costs from the settlement as the farm would have incurred this cost anyway.
The important aspect here is that the farm has a plan in place so that they know what they are going to do in the event of an infection as without a clear plan this can be a long and difficult job which may see costs increasing beyond the policy limit.
Does my policy cover the crops or income I will miss due to having the disease on my farm?
You will need to check what level of insurance you have purchased – all policies offer a degree on consequential loss for missing flocks or missing income but the level of this cover varies dramatically from policy to policy – the only way to be certain is to speak to your provider.
Does my policy cover me if I am in a restriction zone and cannot accept chicks?
No, in general, policies do not cover this. Most policies on offer provide cover only if the farm where the birds are located is the infected premise.
So if you are in an area where restrictions are in place and you are not permitted to restock this will fall outside the scope of insurance coverage
Is the insurance market still open for Avian Influenza business?
Yes, it is, some insurers have closed their books and are not accepting new risks – others are still writing new cover.
This does very much depend on what sort of poultry farm you are and where you are located in the country, but certainly, yes, there is still the availability of cover in the market at the moment.
What happens if my chicks or pullets don’t arrive as they have been infected?
Unfortunately, policies don’t normally cover this issue – policies have been designed for the infection of birds on the farm that’s insured and not for the knock-on effect up the supply chain – so if you are due to receive pullets or are a brood and move type operation and birds are infected only the farm that is infected will be able to claim.
I don’t have an Avian Influenza-specific policy but will my normal farm policy cover me?
We cannot say 100% as you will need to check with your insurance provider, but it is highly unlikely that a standard policy will have any cover at all – they normally exclude any disease losses unless you have specifically purchased a separate policy or extended the cover to include diseases such as Avian Influenza.
As always with any insurance product you need to understand the detail in what you have purchased, policies will differ from customer to customer depending upon the insurer and the insured and their approach to risk within their business.
What will the future hold for poultry farm insurance?
This is always the big question and no one can say for certain, but what we do know is:
- The risk and infection level have never been this high ever so we are in very challenging times
- Insurers will and have already in some areas taken drastic action in reducing coverage and increasing pricing due to the losses they are seeing or have experienced
- Insurers are getting more selective on what risks they write and which ones they don’t write – the broad brush approach of doing all types of poultry farms has probably gone. Insurers will select which type of farms they will offer cover for and which ones they won’t.
- As we get more and more outbreaks, insurers data and information gets better and better – when we were only having 2 or 3 cases a year it’s difficult to model and trend what risks are high and which ones are lower. Now that the number of cases has increased dramatically insurers can interrogate the data better and make decisions on what risks they want to write
- Those farms that are better prepared by way of planning, bio-security, modern and well maintained will be in a much better position to get Avian Influenza coverage.
The brutal reality is that for some farmers in the sector, the availability of avian influenza cover will be a real challenge in the future as insurers will make a decision based upon their interpretation of the data they have.
The best advice is to prepare yourself and the farm as much as possible – even if you don’t have insurance coverage you can still do all you can to prevent it from happening and, should the worst happen, recover as quickly and economically as possible.
