Overcoming rising insurance costs for marts

With mart insurance set to double in the coming year, profits and the very survival of these marts will be under pressure in the future. This is the stark message from Eamonn Bergin, head of food and agri with JLT Insurance Brokers.

He says insurance premiums for a typical regional mart will rise to more than €15,000 next year and premiums at larger marts may exceed €50,000 insurance next year. He warns that individually these marts cannot afford this increase. He believes with the losses experienced by the insurance industry and low investment returns over the past few years it is inevitable that premium levels will continue to increase. He says it is driven by personal injury claims and marts have experienced some significant and expensive incidents, particularly in the area of animal control and movement. This is prompting some mart managers to curtail where farmers can walk during a sale, therefore segregating people and animals more effectively.

He believes were marts to work together and adopt a radically different approach to insurance, they could reduce those costs dramatically. He says this is not just about bulk-buying opportunities; it is also about developing sufficient scale to partially self-insure, while working together to control risks and radically reduce claims costs.

“The percentage increase required by insurers for marts in general will exceed 100%. Naturally, some will fare better than others depending on individual circumstances,” said Bergin. He says that one option would see the marts collectively purchasing catastrophe insurance while retaining a substantial portion of the overall risk as a group. He adds the overall cost of this would be no more that insuring on a conventional basis.

Collective control

Collectively the marts could manage the risk, control, reduction and elimination of exposures and manage the claims. While this may seem an over-reaction to a simple increase in insurance costs, he said it is important to understand that “dealing with the cost of insurance alone will not change the complex factors which affect that cost”.

He said one straightforward way of reducing risk and therefore costs would be to improve how animal movement is managed and in particular to segregate people and animals more effectively.

How would this work?

1Set standards for the management and operation of marts to include processes for the control of animal movement and segregation.

2Management of claims would become an activity in which each mart would participate together with a professional claims management company. The intention would be to address each incident at local level at an early stage while proactively seeking a fair resolution of the incident.

3An agreed audit system, based on the collective management and operational standards created including the agreed site improvements and standards.

Benefits