The Canadian farm has changed so fundamentally that treating it as a single category of risk no longer works, and insurers are being forced to underwrite the family operation and the commercial mega-farm as genuinely different businesses, according to Stacey Mills, vice-president, commercial lines, mid-market at Wawanesa.
Mills said the farm her company once insured bears little resemblance to much of the book today. "There was a time when most of our farm book was mostly hobby farms, a dwelling, and maybe some other farming operations," she said. That has shifted toward something far larger. "Now a lot of these are becoming large and complex commercial operations, much like any other manufacturer you might see," Mills said.
The scale of the largest operations is what drives the comparison. These are not dwellings with a barn attached, Mills said, but businesses with significant revenues, heavy-equipment exposures and constantly shifting risk – operations that, in her description, function more like large manufacturing plants than the family holdings the word "farm" still calls to mind. Much of that complexity is now technological. Today's commercial farms increasingly run on automation, precision agriculture and environmental controls that were uncommon a decade ago, she noted – advances that lift productivity but add new exposures an underwriter has to understand.
That divergence is what pushed Wawanesa to rebuild how it serves the market. Mills said the company split its commercial portfolio into three operating divisions – small business, middle market, and national programs – so that each segment could be underwritten by teams suited to its size and complexity rather than run through a single process.
"I think we're one of the first and only markets who really looked at our farm portfolio and said, you know what, we need to transact smaller farms differently," she said. "We need a different level of underwriting expertise, a different level of digitization."
Smaller farms now sit within the small-business team, where the company is investing in automation and, eventually, the ability for brokers to quote and bind directly – though Mills was careful to flag that as a future capability rather than a present one. The larger and more complex operations fall to the middle-market segment she leads, where dairy farms and other heavy-equipment operations get hands-on underwriting. The split, she said, would have been hard to imagine not long ago. "I don't even think Wawanesa or other markets would have considered doing that five or 10 years ago," Mills said. "That's how quickly it's changing."
What makes farms genuinely awkward to classify, she said, is a feature no other commercial risk shares: the home on the property. "Farms are interesting risks because they usually have a dwelling on them, which is unusual for a commercial product," Mills said. The dwelling is the small part; the rest is the commercial or hobby operation around it – and the size of that operation is what determines which team should handle it.
Pressed on where the line falls between a small farm and a mid-market one, Mills said the industry uses several markers rather than a single rule. Some insurers draw it on headcount – a threshold of, say, no more than 10 workers – though she noted Wawanesa does not define it that way. Number of locations is another signal: a single operation in one town behaves differently from one spread across several sites, and a multi-site farm is the kind that tends to fall into middle market.
The common thread, she said, is that size and complexity now matter more than the label "farm," and the coverage needs follow from there. A small-business farm – a dwelling, a barn, a few animals, perhaps some rented land – is a different customer need from an operation running thousands of hectares with cattle, dairy and substantial livestock. "Very different risks to underwrite, premium sizes, different exposures, different exposure to climate," Mills said.
The point of the restructure, she said, is to match each kind of operation with the right depth of expertise rather than forcing both through the same process. It is a recognition that the farm sector has quietly split in two, and that underwriting has to split with it.
"We're really investing in making sure we serve each size portfolio with the right level of expertise," Mills said.
