Free-range egg producers face escalating insurance costs

Bfrepa made the decision not to renew its highly pathogenic avian influenza group insurance, which covered up to 20 members for £50,000 of secondary cleansing and disinfection costs. It said the decision was very disappointing news for its members and for the Association but was not surprising given the current circumstances following the worst highly pathogenic avian influenza epidemic in history. More than 100 commercial poultry premises have had bird flu outbreaks across Great Britain in the past year.

It said renewal terms for the cover were provided by underwriters at very short notice, within 2 days of the old cover lapsing, giving the Association little time to warn members of the increasing premiums.

The initial renewal quote from insurers was a 221% increase in the premium, together with a condition requiring members to pay 25% of any claim. Bfrepa went back to the underwriters asking for a quote which halved the cover available in the hope that the renewal costs to the Association could be maintained at existing levels. Despite halving the cover, the quote was still £16,306 more expensive than the previous year and would still require members to pay the first 25% of any claim.

Bfrepa said it felt the quotes were unacceptable on the following grounds:

• An increase of 221% is unheard of even in this difficult avian influenza insurance market. Most individual policies have risen by between 15 and 25% at renewal.
• At the time the renewal offer was presented, not one successful claim had been made against the policy since it started in 2014. Two claims are currently in the pipeline, which the Association expects will be paid.
• The paucity of claims has meant that the policy has faced scrutiny as to its suitability of purpose given the worst avian influenza season.
• The increase in packers and other industry stakeholders with their own group policies covering members has reduced claims and the value of the policy.
• The costs of secondary cleansing and disinfection have proved to be much less than anticipated when Bfrepa started the policy.
• Spending another £29,211 of Association funds for a policy that requires members to pay 25% of any claim could not be justified.

Members who do not have existing avian influenza cover and who might have benefitted from the secondary cleansing and disinfection cover should contact Scrutton Bland with the aim of obtaining comprehensive disease insurance.

In the meantime, the organisation will continue to research the difficult market – there are only 2 underwriters for both avian influenza and/or salmonella cover – in the hope of finding an affordable group disease scheme.

• NFU Mutual bird flu cover includes secondary cleansing and disinfection, which is now available from £50,000 increasing in batches of £25,000 up to £200,000 with higher limits available on request.