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How climate change is affecting farm insurance

During February, storms Ciara, Dennis and Jorge all delivered a vast volume of rainfall over parts of the UK making it the wettest ever February recorded in the UK, according to the Met Office. This was following an already record period of rain from mid October to mid November, resulting in saturated soils and compromised drainage systems throughout the winter of 2019/20.  

Storm related rainfall can cause inland flooding but has also resulted in impact that is more frequent to crop establishment and grass growth, often limiting field access and undoubtedly reducing yields for the forthcoming harvest. Whether climate change or a matter of other influencers on our weather systems are the cause, British Agriculture is experiencing some of the most challenging conditions in living memory.  

Extreme weather is becoming all at once more common and less predictable meaning farmers are: 

  • having to learn how to best plan
  • manage contingency 
  • cope with significant changes in ways that haven’t been seen before 
  • adapt to unprecedented speed of changing conditions. 

At Marsh Commercial, we know how devastating the impacts are for farmers in both the immediate and longer-term. With an understanding of the risks facing the UK farming industry across all sectors, we can help advise and support farming businesses as they consider their insurance portfolios.

Our Agricultural Account Executive; Ed Davey based at our Lincoln branch is not just an insurance broker but a farmer too. He gives his advice on extreme weather insurance considerations:

  • Hail cover is ever more important for sensitive crops such as oilseed rape and vining peas. However, if commodity prices increase in an uncertain world, even more crops that are robust will pose a risk. This cover is an add-on to standard farm policies and most relevant to areas where hail can be prevalent. For those that have suffered hail damage they know it can be catastrophic. 
  • Storm cover is more routinely chosen by clients to protect assets and crops in store, but not everyone insures the risk.  There is no cover available in the open, and even some insurers decline risks in open sided buildings. However, it is becoming a more important consideration with deeper low-pressure systems and the influence of the jet stream bringing higher incidences of risk to property. One thing most people forget is that heavy snowfall resulting in collapsed roofs is covered by the storm peril.  In 2010, we witnessed a striking number of claims arising from this event. 
  • Flood Cover is now more sought after, as there are growing incidence of high rainfall in short periods, resulting in run-off from land and breaching and over topping of watercourses. Note that again livestock and crops out in the field will not be covered for flood. However, back in store, crops, fertiliser, feedstock and property can be covered by extending terms under standard policies.  Bear in mind history of flooding may result in terms being imposed or even restricted by insurers.  New event cover and capacity such as “flood flash” is starting to bridge that gap when it arises. 
  • Fire and lightning are an ever-growing risk as the hot dry summers and rising temperatures create energy, which enhances fire risk, alongside increased likelihood of summer storms such as whirlwinds, tornadoes and cyclones. Any increased risks from this needs to be taken into account.  Whilst most farming businesses will have a degree of business interruption cover, many do not. This cover will provide for loss of crop due to a fire peril out in the field. If the predicted hotter summers materialise, it really is an essential aspect of cover. 
  • Business interruption cover with most farm insurers takes the insurance contract a significant step further than basic material damage cover.  I would always recommend taking out a broad range of perils under this section of cover to deliver protection not least to deal with the ever-growing risk of violent and sudden storms throughout the year.

It is important to us that your insurances are arranged correctly, tailored around your own needs and in doing so give you peace of mind.

To find out more on how we can be of assistance please contact us here.  

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