Gamble just not worth it
Taking a punt on weather is a major risk
FARMERS are effectively professional gamblers who bet on rainfall, temperatures and prices, but even the most consummate gambler tries to hedge their bets sometimes.
Crawford Agriculture National Agriculture Leader Ken Bullen has seen plenty of it in his line of work, helping farmers to assess their risk exposure and find the right insurance as well as assessing loss in the event that things go wrong.
Mr Bullen said he had seen the full gamut of experiences in his 35 years on the job.
There was the time a farmer who had insured for decades without making a claim dropped his insurance.
Of course, that was the year Murphy’s Law came knocking and he lost out big time.
“The 2014/15 season, I spoke to a grower that elected not to insure for the first time in 20 years,” Mr Bullen said.
“The significant damage to his farm in that year resulted in his bank foreclosing on the property.”
Then there was the farmer
who had never taken out insurance but decided to bite the bullet and get some coverage.
That year he lost his crop and was able to make a claim.
“At the end of the day it’s about risk management and insurance is a tool in the belt,” Mr Bullen said.
“There is a high number of things you can do to mitigate risks.
“You can minimise them firstly by things like variety selection and planting dates and you can risk manage price by hedging and selling forward.
“But blokes that punt against the weather and come in and out of insurance really run a risk.”
Plenty of changes to the availability and flexibility of farm insurance had taken
place in the past few years and Arthur J Gallagher Insurance Brokers branch manager Tony Head said farmers had the option now to insure against more than just the traditional perils.
“Historically farmers have been able to cover the main risks of hail and fire to their crops,” he said.
“In recent decades there has also been the option to
cover crops for perils such as spraydrift, livestock intrusion, grain and hay storage damage and transit losses et cetera.
“There has been the introduction of multiperil schemes in recent years.
“These policies enable the farmer to insure against a larger range of possible reduction in production but are differently price structured accordingly.”
The most common mistake was usually under-insuring.
“When assessing claims for farmers the most common areas that we see not adequately covered is the potential production of the crop,” Mr Head said.
“Some growers will ensure just for production costs, however, the majority have a desire to protect their production and monitoring their potential yield and adjusting their insurance schedule during the season is imperative from our experience.
“The best way for farmers to be confident they have the correct level of insurance for their particular business – and their unique risks – is to speak to an insurance broker who specialises in providing cover to rural clients.”
Contact AJG Toowoomba on 4639 7111.
❝ At the end of the day it’s about risk management... — Ken Bullen