Livestock insurance – Burgeoning?
“If you want to rear chicken, beware” – A contemporary Tema proverb
Advertisement
It is instructive to note that the very week my article on Agric Insurance was published, consciously advising poultry farmers to consider such an insurance policy, was the same week news broke out about the detection of bird flu in Tema and its environs.
Following this sad news, many financial experts joined in the chorus to call on poultry farmers to seek financial risk protection. Indeed, I felt ‘prophetic’ when I woke up to the news after my feature was published just a day prior (December 7, 2015).
Livestock insurance
Livestock insurance is a restricted policy largely offered by specialist insurers, often associated with Lloyds in the UK. The policy is primarily patronised by farmers, camel and cattle herders, and some pet owners.
Generally, the loss of livestock by slaughter, death, disease or theft can occur through several unaccountable causes. This type of insurance, therefore, provides adequate compensation in the event of loss of livestock.
What’s covered
There is no standard cover for this type of policy because the nature of cover varies from insurer to insurer. Thus, the policies are usually tailor-made for the particular risks.
Meanwhile, death following within 14 days of accident or injury; slaughter on humanitarian grounds; and a slaughter certified by a qualified veterinary officer or the insurer’s consent, must be consequent to the happening of the following:
•Fire, lightning, earthquake, explosion and aircraft;
Other Trending Stories
•Riot and malicious damage,
•Electrocution,
•Loss in transit, while on foot or vehicle, at any public sale, market or yard or while straying from same or insured’s premises,
•Sheep, cattle or poultry worrying by foxes as well as dogs,
.Theft and unexplained disappearance normally after a minimum of one month,
•Compulsory slaughter due to an epidemic (e.g. bird flu),
•Death following illness or disease. This will include anthrax, TB and brucellosis,
•Breeding risks of selected types of animal from death from pregnancy or parturition (delivery),
.Infertility following accident, illness to e.g., bulls and rams,
•Territorial limits – the territorial limits of the cover are always clearly defined. I am sure if the Savannah Accelerated Development Agency (SADA) had had this policy, the many guinea fowls reportedly suspected to have flown to Burkina Faso and Togo would have been duly compensated for…just giggling!
Types of livestock insurance
There are several types of livestock insurance, but the two most common ones are:
a.Insurance on a ‘specified animal basis’, with no upper limits.
b.‘Unspecified basis.’ Here there is usually an upper limit of cover per animal say GH¢300 and if the insured wants to exceed this limit, a special policy will be issued.
Typically, the indemnity covers only the market value of the animal (s), at the time of the loss. While the condition of average applies to livestock insurance, some insurers are able to modify the average principle to meet the customer’s expectation.
Advertisement
Exclusions
Generally, the following exclusions apply:
a.Slaughter without the insurer’s consent or veterinary officer’s certification
b.Castration or surgical operation (unless carried out by a specialist veterinary or deemed to be necessary to save the animal’s life)
c.Radioactive contamination
d.Inoculations (unless necessitated by accident, injury, illness or disease)
Advertisement
e.Sonic bangs, war risks, etc.
f.Excesses: Some insurers will impose compulsory excesses to certain aspects of the cover, e.g. theft and unexplained disappearance. Excess may be imposed either on a loss or per animal basis.
Special underwriting aspects
Due to the delicate nature of this policy, certain special underwriting techniques, such as the following, are required:
- Detailed knowledge of farming practices and livestock habits,
-Type of livestock is important (particularly where diseases are concerned),
Advertisement
- Purpose of use of livestock,
- Previous loss history,
- Breed characteristics,
-Degree of state of veterinary controls,
-Market values at the time and place of loss,
-Consequential loss.
The aforementioned are by no means exhaustive and much will depend on the individual underwriters’ practice and judgment.
The way forward
While it is not clear the number of insurance companies offering livestock insurance in Ghana, it is becoming more burgeoning to include this type of insurance in their books.
The challenge, however, is how insurers may ensure prudent underwriting of such policies. This is against the backdrop that there is currently an epidemic, but insurance thrives on the basis of the unknown and the not-so-eminent.
Similarly, as a social intervention package, the government may also leverage on the enormous benefits that abound in livestock insurance. For instance, while it is welcome news that the government has paid some compensation to the poultry farmers who suffered losses in the recent bird flu outbreak, a long-term government commitment should include collaboration with the farmers and insurers, in particular, to provide an insurance cover.
Moreover, the distinction between livestock insurance and bloodstock insurance, which is the insurance for camels, horses, donkeys, etc. must be noted. Livestock insurance is rather concerned with poultry, goats and sheep.
In this regard, the mandate of the Ghana Agricultural Insurance Pool (GAIP), whose original focus seems to be on crops, should have the same focus extended to livestock insurance.
“Until next week, “This is Insurance from the eyes of my mind.”