Brett Klau, Risk Specialist for Eye Peninsula farmers

Under-insurance: a significant risk ahead of the fire season

Our Risk Specialist for Eyre Peninsula (EP) Brett Klau encourages farmers to develop a bushfire survival plan and look at which items on their farm pose significant risks. Undertaking appropriate risk mitigation now can help reduce unexpected repair bills.

When asking farmers across the EP how they are going, they generally share the same sentiment: with the grain harvest underway, they want to ensure they get the grain into the bin without undue loss or delay.

These concerns extend from risk of reduced grain yield or quality due to storm or fire damage, weather induced harvesting delays or mechanical damage and breakdowns.

For more than 25 years I have worked in plant nutrition, grain marketing and risk management. Now, as a Risk Specialist with Achmea based in Port Lincoln, I partner directly with farmers across the EP to assess and help mitigate their on-farm risks.

What I also observe is an increased risk in vehicle and property damage by native animals, which we have limited control over, but we can explore both insurance cover and practices that may help to reduce any financial impact on the farm business.

As we move through harvest and into the fire season, it is timely to remember the importance of reviewing insurance levels right across your business.

Under-insurance: a significant risk ahead of the fire season
There’s no doubt times are tough and every dollar counts.

Cost savings are top of mind for many farmers, and to achieve some financial relief, many are reconsidering areas of expenditure, including insurance. To lower premiums, it’s not uncommon for farmers to consider reducing their Sums Insured. However, this is one of the biggest risks a farmer could take.

While some short-term cost savings are achieved, farmers can be left under-insured and financially exposed, with damages often much greater than what they could bear alone. There are other ways to lower premiums, including undertaking a Risk Review to mitigate on farm risks, as well as looking to increase the excess.

Farmers can’t afford to under-insure their farm business
If a farmer’s cover has not been updated for several years, it most likely will not reflect the accurate value of a large portion of their most important assets, which means they may be under-insured as we move into a critical risk period over harvest and bushfire season. The impact of a loss can be wide-reaching, and it’s not limited to loss of income alone.

Not only does under-insurance have potential negative impacts on individuals, their farming businesses, lifestyle and families, widespread under-insurance in our region can significantly affect our economic resilience.

Assess and mitigate risks
I’m urging all farmers in the EP to develop a bushfire survival plan if they haven’t already, assess which items on their farms pose significant risks and update their insurance based on an analysis of their farming enterprise.

Keeping farmers farming
Five key tips to keep farmers farming during the summer storm season:
1. Get ready by developing a bushfire survival plan (if you haven’t already) and regularly check the Grass Fire Index and official fire warnings, especially during harvest.
2. Assess and mitigate your on-farm risks by undertaking an Achmea Risk Review. Reducing risks on your farm is key to building resilience, and mitigating risks may result in lower premiums.
3. Partner directly with your insurer to make sure your cover reflects the current value of your most important assets.
4. Look to increase your excess rather than reducing the Sums Insured if you are looking to reduce your premiums.
5. Don’t set and forget: keep insurance up to date and undertake regular reviews of your most valuable assets.

To strengthen the resilience of agricultural communities when times are tough, we need to work together to assess and manage farming risks and avoid the risk of widespread under insurance to keep our farmers farming.