Blizzard prompts FMG to offer livestock catastrophe cover
Friday 1 April 2011
Blizzard prompts FMG to offer livestock catastrophe cover to sheep farmers
FMG in partnership with the farming industry has developed an innovative Livestock Catastrophe Policy for sheep farmers.
This introductory offer is the first of its kind in the New Zealand insurance market and has been developed in response to the week-long blizzard that hit sheep farmers hard last September in both islands.
“Typically farms are well set up to manage Mother Nature year in year out. This policy is set up to respond to a ‘once in a generation event’ that challenges even the very best farming system,” FMG General Manager Advice & Insurance Conrad Wilkshire said.
“It’s a simple, up-front forward cover with no strings attached that typically may not cost any more than the cost of insuring the farm 4WD, particularly if it has not been bent lately!”
The three immediate financial impacts from a major natural disaster like last September are: loss of capital stock, loss of income (lost lambs) and the direct costs of conserving excess supplement once the weather clears - given properties will be carrying substantially less stock than what is optimal.
“The level of cover will be agreed up front. If you have a claim, the money is paid out at an agreed value, starting at $25,000 up to $100,000 depending on the previous balance date and sheep valuation,” Mr Wilkshire said.
“The policy seeks to limit the financial impact associated with a catastrophe like the unusually prolonged blizzard where you lose 15%-plus of total sheep livestock. Importantly this includes immature stock, including lambs. It is not intended to cover the capital cost of replacement; it is purely an agreed cash payment benefit.
“FMG believes this initiative has the potential to close a gap in the market for sheep farmers.
“Other producers in the primary sector take out weather event cover, for example, hail for crops. This policy goes one step further.
“It's the first of its kind on the New Zealand market and seeks to address a historic market failure to limit the financial impact of natural disasters on farmers’ bottom line from livestock losses.
“Farmers are not daft and they will assess this policy in terms of what is right for them personally. Obviously we can help with this on-farm.”
FMG will also run field days in Kimbolton and Wyndham in May to assist farmers decide what might work for them.
“This is a limited introductory offer targeting 1,000 farmers and predicated on farmer support from both islands. As it finds support we build from there,” Mr Wilkshire said.
“FMG has 106 years of history partnering farmers and we remain open as always to all sectors in partnering their risk management requirements.”