NFU Mutual, the UK’s leading rural insurer, has teamed up with parametric insurance specialist Skyline Partners, insurer Markel, and broker Gallagher to introduce a groundbreaking insurance product designed for dairy farmers.
This parametric heat-stress insurance, the first of its kind in the UK, aims to mitigate the risks and financial losses associated with heat stress in cattle.
The newly developed insurance cover operates on an index-driven model, offering dairy farmers pre-determined payouts based on trigger events. Constant monitoring and recording of independent satellite and weather-station data ensures accurate assessment of temperature thresholds set by the policy.
If these criteria are breached, the policy will quickly disburse pre-determined claim payments after expiry. Farmers can use these payments to cover production losses and improve their farm infrastructure to prevent the adverse effects of heat stress.
The insurance product offers four levels of coverage, allowing policyholders to tailor their policies to their risk appetite, budget, and fleet size.
NFU Mutual carried out extensive research, which revealed that heat stress was the main concern for 41% of dairy farmers surveyed, even though 70% of them had not made significant changes. step to address the issue.
Recognizing this urgent need, NFU Mutual, Skyline, Gallagher, and Markel are working together to create a solution that not only supports farmers but also aims to explore more on-demand parametric insurance that covers for the agricultural and horticultural sector, which faces increasing climate losses. .
Chris Walsh, Farm Specialist at NFU Mutual, stated, “Heat heat in cows is becoming a major concern for many dairy farmers as the summer heats up. Farmers are trying to keep higher levels of animal welfare while combating the rising costs associated with heat loss. To help our dairy farmers address this pressing issue, we partnered with agricultural experts, dairies, farmers, and insurers around the world to create a new product that works simply and effectively. This offer helps to reduce the harmful effects of heat on the productivity of the herd and the general welfare.”
Parametric insurance has proven successful in protecting farmers’ income in some countries.
Laurent Sabatié, Co-Founder and Executive Director of Skyline Partners, expressed excitement about the partnership with NFU Mutual to introduce parametric insurance to the UK agricultural sector. He emphasized that parametric insurance products, such as the one developed for NFU Mutual, promise a radical change in the way businesses are insured.
Gethin Jones, Co-Founder and Executive Director of Skyline Partners, highlighted the limitations of traditional insurance policies, saying, “Claims under traditional insurance policies require physical loss or damage to trigger a claim. But not all losses include fire, animal death, or other physical loss. A heatwave can drastically reduce milk yields, for example, and put long-term sustainability of a farm is risky. Parametric insurance helps protect farms from climate-related losses with cover tailored to the needs of individual farms and a simple, transparent mechanism to pay.
Rob Wells, Head of Livestock in Markel’s International division, expressed enthusiasm about supporting farmers’ risk management in new ways. He stated, “At Markel, we are always looking for new, smarter ways to support our customers and to test new ideas that respond to changing needs. We are delighted to be working with our partners, NFU Mutual, Skyline, and Gallagher, on this initiative and support farmers’ risk management in a way that traditional insurance products do not.
The NFU Mutual Heat Stress (Dairy Supply Chain) Insurance is currently undergoing a trial period, starting in May 2023. As part of this new service, customers will receive a personalized climate summary report for their operating area, enabling them to make informed decisions and adapt their strategies accordingly.
