Insurance is one of the most important factors for having a successful poultry farm. However, it can be difficult to obtain due to certain risk factors.
Securing insurance coverage, with a focus on poultry farm fires, was discussed by Brett Cohrs, Palomar Insurance Sr. Vice President, and Ross Milne, Cottingham & Butler Risk Management Consultant, in an interview with Egg Industry Insight.
Over the last five years, fires have become a focus for producers and the public.
The number of barn fires has caused insurance to increase significantly in costs for producers. Additionally, the re-build cost for the barns has increased. Milne said “Producers have seen the significant increase in the cost to construct layer houses. This is a combination of increased material cost, increased labor costs and the fact producers are for the most part building larger, cage-free facilities.
Currently, multiple insurers share the risk to provide the amount of coverage a producer needs, especially for larger farms. However, this has led to insurers reducing the amount of coverage they are willing to offer to any one egg producer, explained Cohrs.
“Underwriter appetite has become so restricted that no insurance company is willing to insure 100% of the risk exposure.” said Milne. “We have to go all over the world to find insurance for the poultry industry and build programs with multiple carriers
The submission to an insurance provider is vital
Many factors are involved with an insurance provider’s coverage decisions and the portfolio or submission that is presented to a provider is of major importance.
“Risk mitigation technology, practices or site improvements, such as new construction with plenty of spatial separation from other buildings, help increase the participation of insurers,” added Cohrs.
Information such as fire prevention plans and third-party audits need to be a part of the submission that goes to underwriters.
Milne continued: “Underwriters are under pressure following multiple years of loss ratios exceeding 100%. They have become very selective in their underwriting appetite. Our responsibility is to to educate them about the poultry industry and specifically what our clients are doing to separate themselves as best-in-class operators. The more education we can provide the underwriters they more comfortable they can become underwriting the risk at the most advantageous rate.