Over the last six months we have seen the rural insurance market “harden” quite significantly, resulting in Farmpack Insurance becoming more expensive to purchase and in some cases difficult to obtain. Following concerns from some our clients AgriRisk recently sent an article by email explaining what’s happening, an excerpt follows.
Why is the Rural Insurance Market Hardening?
Farmpack insurance has been very competitively (and artificially) priced for a number of years due to many Insurers in the market, but over the last two years a number of natural catastrophes occurred, significant claims resulted and insurers were forced to reassess their underwriting guidelines and pricing. As a result insurers are staring to decline to offer renewals or accept new business and/or are seeking significant price increases.
What’s AgriRisk Doing When Insurers Decline to Offer Renewals
If an insurer declines to offer your renewal, you must by law disclose this to any new insurer and this automatically triggers alarm bells, regardless of the reason. Exacerbating this is the ridiculous situation where some insurers are declining to renew on the basis of a single significant loss, like a storm event. In these circumstances, AgriRisk is approaching alternative insurers that have a more realistic underwriting stance. Where renewals are declined due to a relatively high frequency of small claims we will often recommend you accept a higher excess to ensure we can secure alternate cover at a reasonable price, or we can split the Farmpack policy to quarantine the poor performing section.
What AgriRisk Is Doing When Insurers are Seeking Significant Price Increases
Firstly AgriRisk will analyse your loss history to ascertain whether those increases are justifiable. Secondly we will seek quotes from alternate insurers (providing similar coverage) where we believe we can achieve a better price for our client.
How Long Is This “Hard” Market Likely to Last?
The insurance market is just like any other market driven by supply and demand. The market will soften again when more insurers and their capital move into the market as profitability improves.
If you’d like more information on this, please contact AgriRisk for a copy of our information flyer.