According to agriculture sector insurers, most of their claims don’t come from droughts, floods or damage to farm machinery.
“The things behind most of our claims are really innocuous,” said James Hooper (pictured). “Cars hitting kangaroos, certainly that's our number one.”
This loss driver probably doesn’t surprise brokers in the sector. He said other significant or growing insurance claims risks to farming businesses are the ones that keep ag insurance underwriters – and likely brokers - awake at night.
Hooper is managing director of Rural Affinity, an independent underwriting agency that provides covers to ag businesses across Australia.
“When I say silent, a lot of brokers are aware of it but solutions aren't easy to find and they will be costly,” he said. “We're seeing a lot more things like renewable energy, solar farms and wind turbines being adjacent to farms.”
Hooper said that, to his knowledge, this isn’t a big problem yet.
“But the value of some of these assets near farms, relative to the amount of liability cover or limits that are available in the market, does mean there's some exposures being created there,” he said. “Obviously, if a fire escapes from a farmer's farm and destroys a solar farm and they have a $20 million liability limit, it may not be enough.”
Natural catastrophes like droughts and floods are also major ongoing challenges for the agriculture sector. However, Hooper said its usually not the big disasters that make global news - like the recent NSW floods or ex-Tropical Cyclone Alfred - that cause him the most worry from an insurance exposure perspective.
He said it is often weather events that don’t generate much news or claims, that can cause the most impact to his farming clients.
“The things that cause us difficulties - and this year was a great example – are events like the really large hail storm in Harden in southern New South Wales,” said Hooper.
He said in terms of loss impact for the insurance industry this wasn’t a big event.
“But for its magnitude, for rural insurers like us, it’s a fairly major event,” said Hooper.
This February storm resulted in the Albanese and Minns governments activating disaster recovery support for the impacted communities.
According to one local news report: “67 properties recorded damage in the event, with 12 being deemed unhabitable due to the destructive nature of the storm and 13 were inundated.”
“We’re in business for major events, but the thing that's difficult in our portfolio is its diversity and geographic spread which can make it tough to resource for those major events,” said Hooper.
He said the storms in Harden meant agencies like his had “to work really hard” to manage claims because they don’t have the loss adjusting and repairs resources readily available locally. “So the real challenge for us is one of those nat cat events, which the rest of the world doesn't know exist, and the industry isn't geared up to cater for, because they happen in remote areas,” said Hooper.
NRMA insurance data shows that kangaroos are the most likely animal to be involved in a car accident, accounting for 85% of all animal collision claims.
In 2023, the first year after the COVID-19 pandemic’s lockdowns, the insurer’s data showed a 34% spike in these claims compared to 2022.
The insurer said claims data shows a heightened risk of wildlife collisions during Autumn and Winter when days are shorter and nocturnal animals are more active.
The NRMA release offered safety advice for drivers, also relevant to brokers and their farming business clients:
Are you a broker in the agricultural sector? Please tell us about some of the claims you’re seeing from clients below
