Closing the insurance gap in livestock

Every few years, epidemic disease outbreaks cause death to millions of cows, pigs or chicken. Besides harming animals, it is also a financial disaster for the farmers – unless they have adequate insurance to help them recover and stay in business.

There are many risks to livestock, including floods and fires. But what makes epidemics a particularly pressing issue? For Beat Schnegg, Head Agriculture Reinsurance at Swiss Re, the answer is clear: "There is still a large insurance protection gap, with too many farms ill-prepared to withstand losses in case of an outbreak." That is certainly true for the many smallholders around the globe to whom the loss of one animal is catastrophic. But it's also valid for the large intensive farms who run in economic problems to restock after a culling due to an epidemic and to bridge the business interruption till the outbreak is controlled and the standstill lifted.

When it comes to insurance for livestock governments play a crucial role. Ernst Urech, Senior Underwriter Agriculture at Swiss Re and the author of the publication Closing the insurance gap in livestock: "Underwriters need a solid understanding of governments’ disaster response, which in turn must be transparent and consistent to allow for the calculation of an adequate exposure scenario and ultimately a fair premium rate. Furthermore, governmental subsidies can be an important driver to improve insurance uptake, especially if this stimulates the private insurance sector to bridge the true gap between government compensation and the actual loss."

Current livestock insurance programmes are often rather limited in scope. Yet livestock insurance is sure to have a bright future. Adds Urech: "Underwriters need to be able to craft commercially viable solutions to meet farmers’ needs, chief among which is the catastrophic risk emanating from epidemic diseases and their consequences."


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