FBD fears farmers will drop insurance cover due to Brexit cash-flow problems
FARMERS might ditch insurance cover in a “nightmare” Brexit scenario, the chief executive of FBD has warned.
“That’s a nightmare scenario and a crash-out situation where the whole country is very impacted,” Fiona Muldoon told the Irish Independent.
“It’s a risk,” she said. “I watch what’s going on in Westminster in horror – the risks they’re taking with their own economy and then the impact it will have on people in Ireland who did not vote for it and who don’t want it. We’re certainly hoping that sense will prevail.”
But Ms Muldoon insisted the insurance company – which counts a large number of farmers among its shareholders and customers – will continue to do what it can to support them as the UK leaves the EU. She warned investors yesterday that a doomsday no-deal Brexit could severely hit farmers’ cashflow.
“We’re very attuned to the risks, and we would certainly hope that it doesn’t come to that, but you have to say, given the omnishambles in the UK, that we couldn’t discount a crash-out Brexit and WTO [World Trade Organisation] tariffs,” said Ms Muldoon.
She said that the “name of the game” for FBD will be watching whether farms in particular become “so hard hit cashflow-wise” that they might end up going uninsured in a hard-Brexit scenario.
Ms Muldoon said that was “not something which you would want to see anybody do”, given that farmers “are their own livelihoods”.
“We will watch carefully,” she said. “It’s likely that farm incomes will be hit, but I think it’s also likely that agri and the agri sector would have to be helped if it was a crash-out Brexit.
“Certainly, we’d expect that there would be some sort of Government intervention – if the beef sector, say, was hit overnight with WTO tariffs,” she added.
FBD noted yesterday that 24pc of its €371.5m in gross written premiums last year was for farm insurance. An additional 8pc was for agri vehicles. However, just under 57pc of its total customer base is in the farming community.
Ms Muldoon said FBD was “heartened” that the Government is so focused on Brexit.
“It has been cohesive and united around the approach they’re trying to negotiate to the best possible advantage of Ireland,” she said.
The FBD boss pointed out that the company has raised its planned dividend in respect of 2018, a payment that will be received by shareholders later this year after it’s approved at the company’s annual general meeting. She said that would provide a modest financial lift to many farmers.
FBD is closely linked to the farming community and it secures a core part of its business from the sector.
The IFA-linked Farmer Business Developments and FBD Trust between them own more than 32pc of FBD’s shares, which are listed on the stock market. The company is valued at a total of €310m.
Ms Muldoon pointed out yesterday that more than three-quarters of FBD’s business is outside the capital.
She said the company aims to secure more customers within the Dublin area, but will do so gradually. “The big challenge for us is to create urban awareness,” she said.
The company is trying to raise its profile as an Irish insurer by sponsoring Ireland’s team for the 2020 Tokyo Olympics. FBD will begin an advertising campaign towards the end of March featuring some of the athletes.
‘We’d expect that there would be some sort of Government intervention’