by Jon-Jon Smit, Executive Head: Sales and Marketing at CIB
Like most industries, the agricultural sector faces a number of pressures right now, many (but not all) of which are related to Covid-19 and consequent lockdowns.
Economically, we have seen the world going into turmoil due to the pandemic, and the agricultural industry has not been immune from the impacts of the virus. This has been particularly true for farmers who export produce, both to neighbouring countries and further afield.
The closing of borders had a truly detrimental effect on many of these enterprises. The biggest concern now is to focus on economic recovery in what otherwise has been a good year in terms of production. One of the risks the industry faces is irregular weather patterns resulting from climate change. Heavy rains, floods, hail, lightning and drought can wreak havoc on crops and livestock.
Plus, there is an increasing reliance on machinery and technology in the farming process, which adds the risk of breakdown or electronic failure. The scale of many farming operations means the threat of loss is enormous. One serious risk event could knock out an entire year’s income. A comprehensive agricultural insurance policy is vital to protect your property and your business from a potential catastrophe.
More and more farmers see the benefit of agricultural insurance to cover themselves against a number of risks, but the percentage of farms that have insurance remains low. Some estimates put the value of crops covered in South Africa as low as 30%. This leaves the majority of South Africa’s crops vulnerable to the perils mentioned above, with only a few farming operations able to cover any significant losses from capital on hand.
But there is more to agri insurance than covering your crops. A specialist agricultural insurance broker will help you to optimise your insurance cover depending on your risk requirements and financial circumstances. With solid risk management measures in place, the premium that you pay can be stretched to cover a number of areas, including personal and commercial cover.
Personal cover includes your domestic buildings, household contents, all risks, watercraft and personal liability. On the commercial side, you can take out cover for motor vehicles (including specialised cover specific to vehicles and tyres for agriculture), fire, livestock, office contents, irrigation systems, electronic equipment, business interruption, theft, money, glass, fidelity (theft of goods or money by staff), goods in transit, business all risks, accidental damage, public liability, employer’s liability, stated benefits and group personal accidents.
Each agricultural policy is unique. Risk profiles change depending on location, season and crop type. Fire is a huge hazard, and one of our biggest sources of claims. During harvesting season we see many instances of harvesters catching fire in the heat. In winter, especially in the drier areas of the country, fires are a regular occurrence.
These not only lead to the obvious destruction of pasture and crops, but can also cause damage to a farmer’s property including buildings, vehicles, equipment, fodder and seed. It’s vital to consider this eventuality when planning or reviewing your insurance cover.
Also bear in mind that your harvesting equipment represents a lower risk while it is idle. So while your equipment is standing still, you should be investigating a lower premium for that period. Your agricultural policy should be designed around your needs and lifestyle.
Go through your policy documents regularly with your broker to see where you are and are not covered, and what risk management measures you can take to keep your risks to a minimum.
Enjoy the benefit of CIB’s expertise to protect yourself from risks. Contact them at 011-455-5101 or firstname.lastname@example.org or visit www.cib.co.za for more information.