Avian flu insurance to be offered this July
Thursday, May 22, 2008
by SUSAN MANN
“I think cost would probably be the main factor for anybody to decide whether they were going to buy it or not,” says Henry Stevens, a broiler farmer from the Palmerston area.
Farmers have been asking for insurance to be developed, Stevens says, and he’s glad the Ontario Livestock and Poultry Council is coming up with something but “the cost has to be reasonable.” He’d also want to see more details on what was being covered and how it would work before making any decisions.
Eastern Ontario egg farmer John Bekings also wouldn’t jump in but would wait for more details and information on the cost. But he’d “certainly look it over.”
The Council plans to hold information meetings for farmers in Ontario to explain the pilot insurance program, says Deborah Whale, chair of the insurance committee. Dates haven’t yet been set for the meetings but she says information will be circulated to the boards involved in June.
The insurance will cover farmers’ costs when there’s a disease outbreak, including animal deaths even before the confirmed diagnosis, cleaning, disinfecting, business interruption and consequential items such as vet and lab fees. Currently most of these costs aren’t covered by governments or anyone else.
Some farmers have business interruption insurance as part of their fire coverage but they’re not sure if it would kick in during a disease outbreak. Business interruption is a sizable portion of insurance policies, Bekings says. “If your overhead costs are $150,000 to $225,000 a year plus your own living, those are huge costs and they need to come from somewhere.”
The insurance program is in a pilot stage and will initially be made available only to Ontario egg, chicken and broiler hatching egg producers. Those elsewhere in Canada will eventually be able to obtain the coverage.
Initially, only avian influenza will be covered. Other diseases that will be added at a later date include fowl typhoid, Newcastle and ILT.
Insurance for pork farmers is still being developed and will likely be available in late fall.
As part of the project, the Council has worked all winter with an international reinsurance company to determine animal and poultry numbers, intensity of production and value. The reinsurance company analyzed all the potential risks and developed the policy wording.
“Now what we’re doing is negotiating price,” Whale says. The price is determined by risk levels, what’s being done to mitigate risks, what diseases are being covered, and how many farmers would sign up. But the Council’s goal is to “keep the prices as low as possible.”
The Council has received $1.5 million as part of the federal private sector risk management program to develop the pilot project.
It is also developing a preferred delivery and administrative option. But it’s up to the egg, chicken and hatching egg boards to decide what insurance delivery method they’ll use along with other items, such as what diseases and how many production cycles will be covered.
The reinsurance company being used for the pilot is Endurance Reinsurance of America and the insurance company is Echelon Inc. of Mississauga. BF