Gallagher, Markel, NFU, Skyline pilot innovative parametric insurance
NFU Mutual, Skyline Partners, Markel, and Gallagher have teamed up to develop and pilot a new parametric heat-stress insurance for dairy farmers – a first-of-its-kind in the UK.
The index-driven cover will provide predetermined payouts triggered by specific events. Supported by continuous monitoring and recording of independent satellite and weather-station data, the policy will disburse predetermined claims payments when the temperature limits specified in it are exceeded. Farmers can utilise these payments to cover the cost of losses in production and improve their farm infrastructure to combat the effects of heat stress.
NFU, Skyline, Gallagher, and Markel have developed the product with the long-term intention to investigate a range of on-demand parametric covers for the agriculture and horticulture sectors, which face changing climate-related losses.
“Heat stress in cows is becoming a major concern for many dairy farmers as summers get hotter. Farmers are working to demonstrate even higher levels of animal welfare against a backdrop of growing concerns about the cost of heat-stress losses. To help our dairy farmers cope with this growing problem, we’ve talked to agricultural experts, dairies, farmers, and insurers across the world to develop an innovative product which operates simply and effectively. This product will help reduce the negative impacts that heat stress can have on a herd’s productivity and general welfare,” explained Chris Walsh, farm specialist at NFU Mutual.
“Parametric insurance is already used to protect farmers’ incomes in some countries. We believe this type of cover may become increasingly important in the UK to protect other agricultural and horticultural sectors as the effects of climate change intensify, and we are working with farmers and growers to understand the need for a range of bespoke policies,” Walsh added.
Laurent Sabatié, Skyline Partners co-founder and executive director, said: “We’re excited to be working with leading rural insurer NFU Mutual to bring parametric insurance to the UK agricultural sector. Parametric insurance products such as this which we created for NFU Mutual, promise a radical change to the way businesses are insured.”
Skyline co-founder and executive director Gethin Jones added: “Claims under traditional insurance policies require physical loss or damage to trigger a claim. But not all losses involve a fire, the death of an animal, or another physical loss. A heatwave can drastically reduce milk yields, for example, and even put a farm’s sustainability at risk over a long period. Parametric insurance can help protect farms from these climate-related losses with cover tailored to individual farm’s needs and a simple, transparent pay-out mechanism.”
Rob Wells, head of livestock at Markel’s International division, said: “At Markel, we're always looking for new, smarter ways to support our customers and to trial promising new ideas that respond to changing needs. We are delighted to work with our partners, NFU Mutual, Skyline and Gallagher, on this initiative and to support farmers’ risk management in a way that traditional insurance products have not.”
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