The UK’s leading rural insurer has partnered with parametric insurance specialist Skyline Partners, insurer Markel, and broker Gallagher to develop and pilot a new parametric heat-stress insurance for dairy farmers – the first of its type in the UK.
The index-driven cover offers customers pre-determined pay outs based on a trigger event. Independent satellite and weather-station data is constantly monitored and recorded. If the temperature limits specified in the policy are exceeded, the policy pays pre-determined claims payments upon expiration, with farmers being able to use payments cover the cost of losses in production and improve their farm infrastructure to combat the effects of heat stress. Insureds may select from four coverage levels to suit their risk appetite, budget, and herd size.
Research from NFU Mutual found that 41% of dairy farmers say heat stress is a priority risk for their business, with 70% yet to take further steps to reduce the risk. NFU Mutual, Skyline, Gallagher, and Markel have developed the product with the long-term intention to
investigate a range of on-demand parametric covers for the agriculture and horticulture sectors.
Chris Walsh, Farm Specialist at NFU Mutual, said:
“Parametric insurance is already used to protect farmers’ incomes in some countries. We believe this type of cover may become increasingly important in the UK to protect other agricultural and horticultural sectors as the effects of climate change intensify.”
(Fact check; there were over 60 days in the summer of 1976 when the daily temperature peaked above 30 degrees over most of England and parts of Wales. That consistent, two month long heatwave, and sunshine-per-day record across much of England has never been beaten. Only shorter periods of 30 degrees plus daily temperatures, in more localised locations, has been recorded since – Ed)
Rob Wells, Head of Livestock at Markel’s International division, said: “At Markel, we’re always looking for new, smarter ways to support our customers and to trial promising new ideas that respond to changing needs. We are delighted to work with our partners, NFU Mutual, Skyline and Gallagher, on this initiative and to support farmers’ risk management in a way that traditional insurance products have not.”
NFU Mutual’s Heat Stress (Dairy Supply Chain) Insurance is being trialled from May 2023.
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