Easing disease disasters with insurance

Thursday, March 6, 2008

by SUSAN MANN

Initially the insurance will be offered to farmers in chicken, egg, hatching egg and pork sectors. But it will likely be expanded to other sectors and provinces.

“Clearly you don’t want to keep this small. It is way too important for that,” says Deborah Whale, chair of the Council’s insurance committee. “Plus the wider spread it is then the less risk there is for any one group.”

The goal has been to develop “very effective insurance policies that are affordable,” Whale says.

Currently farmers can’t buy insurance to cover the costs associated with disease outbreaks because it’s not available. And governments only compensate farmers for animals that have to be killed. Farmers don’t get anything for the time they’re out of business, clean up and other costs. And farmers forced to stop operations because they’re located close to a farm where a disease has broken out aren’t compensated for their business losses.

“The producers have to foot all those bills themselves,” says Council chair Gordon Coukell.
Part of the project involved finding a way to model risk management on farms, Whale says, explaining that when it came to going on farms and modeling risk management, the large reinsurance companies were stumped.

So, the initial phase of the project focused on developing a risk management model by determining what factors were involved. This phase involved 114 farms across Ontario from nine different sectors. Factors identified ranged from biosecurity protocols, livestock movement and handling procedures and bedding storage to procedures for introducing new livestock.

“We found out that it worked and it was very strongly supported by the reinsurance world,” Whales says.

The next phase was to work out the specifics of risk management on farms in the chicken, egg, hatching egg and pork sectors. Details such as the premium costs and what’s covered are still being worked out. Each sector is to have a different insurance product that’s designed for it.

Coverage is being proposed for business interruption losses and consequential costs, such as cleaning and disinfection, carcass disposal, and vet fees.

During the week of April 14, the Council will present the product details and costs to each of the four farm groups. Insurance will be available to farmers later in the spring.

It isn’t known how many farmers will sign up. But “there’s a significant amount of interest in at least seeing what they’re offering,” Coukell says. “Of course price is going to be a big factor.”

Chicken farmers have expressed a lot of interest in some type of insurance program, says Bill Woods, Chicken Farmers of Ontario board chairman. BF