Agriculture makes headlines for different reasons. The positive stories
tell us about new entrants to the sector and emerging farmers making a difference and contributing positively to the sector, food security and their tenacity. Existing and new farmers are making a difference by working together for the greater good of all!
Sometimes there are also negative headlines such as farm murders
and land grabs, expropriation without compensation, drought and large fires to name but a few!
The question is: what should a farmer do?
For basic insurance purposes a farm consists of three main parts:
• The farmer, his family and household and people on his farm
• The fixed and moveable assets (those things that belong to the
farm or farmer) that makes it a farm such as tractors, sheds, animals,
crops and inputs that I need to protect
• Liabilities: in this context those things that can happen on a farm that may lead to somebody else (a third Party) suffering a loss – typically a fire starts on your farm and burns down the neighbours’ veld or shed
The challenge is to understand this and how to structure a proper insurance
policy around your specific circumstances that will give you peace of
mind. Andries Wiese, Head of Agriculture at Hollard emphasises: “Because
farming is not as simple as people think and the insurance on a farm can
be quite bewildering it is important for a farmer to get proper professional
advice from a broker with a real understanding of the sector and the challenges contained therein.”
In addressing these challenges Hollard has embarked on a journey
to reinvent Agricultural Insurance. Launched late in 2018 this new product
is part of our commitment to brokers and their responsibility towards our clients.
This product combines personal, commercial and agri-specific covers
with state of the art new generation solutions reflecting the challenges the
modern-day farmer and businessman face. By making complex solutions simple and combining that with the luxury of choice farmers can now structure the right cover for their needs without having sleepless nights.
So, how do I go about it?
Insurance is about understanding the risks that my business is exposed to and how to safeguard against those risks.
Risks can be roughly grouped into three types:
• Natural risks over which I have no control – such as weather patterns
• Physical and manageable risks – such as theft, fires, illnesses
• Unexpected risks – we do not know what could happen or when it will
You could probably cover some of them yourself: if your watch is stolen you could go and buy another one – maybe not a fancy one but at least you will be able to do it.
Some of these can have a terrible effect on your business: If you are a
dairy farmer and your milking parlour burns down you have a very expensive problem. Not only will it cost a lot of money to replace, but it will take some time as well!
Even if unexpected things happen you could cover some of it yourself (if
your prize bull breaks the fence to your neighbour and you catch him doing it you can move him to another camp and repair the fence) but some could cost so much that you will not be able to continue and might have to sell everything (if the same bull breaks through the fence and walks onto the highway where he causes an accident and a multiple car pile-up and people die you will be held responsible and have to pay for all the damages!)
The important thing is to know that these things happen and to understand
which are applicable to your circumstances. You should start off by making
a list of all the assets that form part of your business. This will typically be a list containing the following:
• Fixed assets (buildings)
• Moveable assets (vehicles, tools, furniture etc)
• People (who is part of the family on the farm and your staff)
• Who are my neighbours and what do they farm with?
The second part would be to group those together that I cannot farm without or which would cost me too much if I had to replace them myself.
An example would be where there are two sheds on the farm: one is used to store everything in and has a little workshop whilst the second one is empty and quite broken down. The first one is important and will cost a lot of money to replace or rebuild. The second one is not important to me and if it burns down, I will not replace it. Obviously the first one should be insured and the second one does not need to be insured.
Another example would be my tools and equipment where I could decide
that a hammer is not too expensive and can easily be replaced while my
hammermill is expensive, and I cannot just buy a new one if it burns or is
By doing this you now have a list of things that you need to look at insuring. The next part is to make a list of things that you think could happen on your farm and which you would like to have cover against. This list could be as simple as the short list we drew up earlier (nature, physical and unexpected) or you can really make it specific and list all of them: water, rain, wind, fire, lightning, theft, motor accidents, falling over, impotence of my bull, wild animals attacking my sheep etc.
You should now have two lists:
- The things I want to insure
- The things I want to insure against
By matching the two up you then have a list of things you want to insure and next to each item those things you are concerned about. This is the basic document you can then use when discussing your insurance with your broker.
The broker will often help you to make this list and once you have it then use it to structure a proper policy with the right cover for you. He or she will also be able to advise you on which insurance companies can offer the various covers and what it will cost to do so.
Sometimes we think that insurance is too expensive, but you may be surprised to see how cost-effectively a proper policy can be structured and once you have a formal quote you can then decide which covers you need,
and which are not as critical. Just be careful to not over estimate your own
ability to fix or replace things. You may be able to fix the damage to your roof once, but what if it happens again two weeks later?
The natural risks are things that happen in nature. This could be a storm
that blows the roof off your shed or house or blows over a tree that falls
on your car or buildings. It could be a flood after heavy rains and your buildings are washed away or your shed is under water. It could be lightning that strikes one of your animals or hits a building or starts a fire and you have your storeroom burn down. These risks are the ones you have now sorted.
The cover we sometimes forget about is Public Liability. This cover is when
something happens on your property or is caused by one of your employees or even an animal and somebody else suffers a loss. Make sure that your broker provides for this as losses can easily run into millions of rands! You, your family and employees can also be covered against death and injury and as people are the most important part of any business you may want to discuss this with your broker as well.
Our farmers are spread throughout the country and our “Local is Lekker”
approach to business sets us apart from our competitors with Hollard’s 18 regional and sales offices allowing them to do business locally with a full mandate over each aspect of our business.
For a farmer this emphasis is very important as it enables him to not
only have a relationship with his or her intermediary but also understand his insurer to be part of his (local)world with a full mandate and an active participant in ensuring a better future for all: truly a win-win-win situation!
Farmers not only provide food security to every South African but have
also proven themselves to be employers and supporters of local economies by how and where they spend money. They are also involved in social investment.
Farmers are prudent businessmen facing real world risks that the insurance industry is perfectly positioned to help protect against. Hollard already does this with its current product offering.
Going forward and, after the launch of the new agricultural product,
Hollard will be taking the lead by offering a solution that enables both
brokers and clients to take control of their own risk management practises
and thereby protect and enable a better future for all.