Rural insurance premiums soar after climate disasters with contractors, farmers paying the price
- The cost of rural insurance has risen significantly due to natural disasters, a shrinking underwriter market, and inflation on equipment and labour
- Brokers are reporting premiums have increased between 20 to 40 per cent in recent times
- The National Farmers’ Federation is concerned about the affordability of insurance for farmers
A combination of national and international natural disasters, and a fast-diminishing underwriter market plus the cost of goods, are hitting farmers and contractors hard.
According to an insurance broker in Dubbo, New South Wales, premiums have increased 20 to 40 per cent in recent times, depending on the insurer.
Narromine-based spray contractor Ben Burrell covers the central west and Western Plains of NSW, with three full-time staff.
“It’s really scary because I simply can’t operate without insurance,” Mr Burrell said.
Renewing the annual policy for his equipment and liability insurance has cost him over $55,000 for the year, and it is growing.
Despite taking good care of his equipment, Mr Burrell said accidents could happen at any time so he needed cover.
“In all aspects of your business, you’re trying to minimise costs and maximise profits, but with insurance, you don’t have a lot of options,” he said.
“If we happen to make a claim, are we going to get insurance again next year — and how expensive is it going to be?”
Mr Burrell said he had increased his contracting rates to compensate for the climbing insurance costs, but even that had its limitations.
“You’re just passing the issue onto the farmer, which is not really fair.”
How to reduce your insurance bill
Rodney Cox is a Dubbo-based insurance broker with 33 years of industry experience.
He said while natural disasters had played a role in driving up premium costs, the rising prices of materials and labour had also contributed.
Farmers should make every effort to properly maintain their properties to enable them access to a wider choice of insurance underwriters, he said.
The Australian market had just six underwriters left, Mr Cox said.
“Underwriters want good risks,” he said.
“If farmers can do the maintenance — it could be painting, screwing down iron that’s lifted — that gives us a wider selection when we go to the market.”
Expensive machinery needs coverage
The National Farmers’ Federation’s vice president David Jochinke pointed out farmers were already contending with inflationary pressures on machinery, which pushed up the amount of insurance coverage they needed.
“The affordability of insurance is a question and a challenge that farmers have to manage,” Mr Jochinke said.
“We’re seeing machinery costs go absolutely through the roof, and the waiting time to get that machinery has also increased significantly over the COVID period.
“For us, it’s an annual conversation and a line item in our budget that unfortunately has increased.”
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