Chewing the cud – an agricultural insurance brokers view

Ed Davey is a director at Dallas Scott Davey, an independent insurance broking and risk management firm based in Lincolnshire, that is part of the TL Dallas group. Dallas Scott Davey specialises in agricultural insurance. 

Ed said: “Agriculture has faced and risen to major challenges for hundreds of years, not least because Yeoman are generally tenacious and determined.  However, today’s farming has such financial risk in growing the simplest of produce that every family’s crown jewels are at risk.  There are fifth and sixth generation family businesses looking down the barrel of the proverbial gun, whilst simply trying to produce broad acre crops. Agri inflation, conflict, political reform, and market instability have created a perfect storm of uncertainty.  As a consequence, having a professional quality specialist farm insurance broker working for you has never been more important. 

“Supply chain issues are at their most challenging in our farming history.  If you can find fertiliser, it is soul destroying to write the cheque that pays for it.  Farm brokers need to understand how that impacts their client’s farming business.  It isn’t just about whether sums insured are adequate under the revenue section.  It’s more about whether there is any solution at all to a major loss. Will the revenue sums insured potentially be exposed to under-insurance due to the cost of replacing key commodities such as fertiliser if the whole yard goes up? The answer is probably.  Will motor policies have adequate values for tractors to reflect the tight market – the answer is maybe not.   Will wordings be challenged by increasing costs of replacement of attachments, often limited on an unspecified basis under a motor policy – the answer is you should expect it.  Will reinstatement sums insured be sufficient to rebuild that traditional barn – the answer is I doubt it.  Farm brokers need to be factoring all of this into their review and making sure sufficient cover can deal with all of these circumstances.   

“Of course, brokers can’t do it on their own.  Working alongside specialist agricultural loss adjusters is key and given the world we are in, there needs to be a pragmatic approach to mitigating loss at the point of a claim.  Sometimes, however it is just about supporting and listening – as brokers we can’t solve everything and there are challenges our clients face that we can’t do anything about.  Investing our time into our clients’ businesses and becoming part of the support team is key. We can and we must be more than just a financial solution to an event that happened on the farm. 

“Contingency planning has become a key management tool to any farming business.  It is as important as knowing what level of insurance cover one holds.  For too long brokers and agents have reviewed existing cover and talked about premiums as though their lives depended upon it.   Brokers need to offer more and engage and immerse themselves into their farming clients’ businesses.  The conversation can’t be just about an insurance review. 

“Whilst insurance may well indemnify the business financially, the disruption can often go beyond what is covered by a policy wording.  Prevention is as important as any insurance policy.  Safeguarding property, and more importantly lives, must be a key consideration when risk assessing a farming business in the context of disaster, including accidents and extreme weather events.  Whether it be storms, high rainfall, and flooding or as we witnessed this harvest, the risk of fire due to tinder dry conditions, there is a great deal to consider in respect of risk mitigation. 

“Having a contingency plan is a great way of enabling the business to react to a serious event, as well as mitigating the extent of damage the business may suffer.  Simple measures such as training staff, having an in house “fire brigade” with water bowsers and pumps, as well as operational fire extinguishers in all of the vehicles are simple examples of how to prevent a small fire becoming a raging inferno. Highlighting how important committing time to think about contingency is key. 

“There are of course specialist fields.  Brokers need to be one step ahead of major events such as avian flu.  Some enterprises need to be on cover before the unit begins work, such as Christmas turkeys. Once you are amidst the outbreak, it is often too late for other businesses, not yet affected, to seek cover.  Throughout the year as a farm broker, I am advertising the need to consider the cover in the market.  Expecting underwriters to want to increase their exposure amidst an outbreak is naive.  Again, contingency planning, discussing risk assessments and advocating the highest levels of biosecurity are key components to building a strategy to both alleviate and defend against the disease.  Growers need to understand that having an insurance policy against avian flu isn’t a safeguard and that they can take their eye off the ball.  If we want to see cover remain in the market, and premiums remain affordable, and we want to mitigate the incidence of this disease, we have to have joined up thinking, and take collective responsibility in our standards of production across the UK. 

“Then we have the traditional issues facing the farming industry such as rural crime.  Whilst much opportunity still rests with manufacturers building in new security features to our agricultural plant, one has to accept the stable door was somewhat open for that particular horse as it bolted in respect of much of our equipment.  Further, whilst we can immobilise, add trackers, set perimeter alarms, and have CCTV across our yards, we can’t stop the professional, “steal to order” criminals and there is now an element of “terror” attached to theft.  There is absolutely no point in contesting a theft or burglary when faced with armed criminals. So even for the very best, most secure and well managed risks, there is always going to be a theft risk to agricultural plant and machinery.  Given claims inflation and the cost of replacing equipment such as teleporters, quad bikes and 250HP tractors, there is little wonder, given the loss ratios suffered, that farm insurers are wondering what they have to do to keep premiums in check. As brokers all we can do is offer best advice in security enhancement and given the “duty of care” aspect of all wordings in the market, make sure our clients understand their responsibilities. 

Given the risks the industry faces, it certainly underlines how important it is, that the farming world has support from brokers, insurers and loss adjusters.   However, as never before it is key that the personnel are top quality.  Many years ago, the farm drive would witness passage from all sorts of reps, whether they be seed, grain, machinery or finance.  The bank manager would be offered a full cooked 3 course lunch.   Long gone are those days.  Yet, as brokers we still sit around the kitchen table and take part in the family farming debate as well as advise on insurance requirements. That is a privilege we must not waste and it is key that farm brokers have a firm understanding of the farming industry before embarking upon offering key advice. 

“It is also important to remember that the farm insurance market is finite.  Due to claims inflation, weather events and the ever-growing incidence of crime, not forgetting attritional claims, there is no surprise that the market remains firm and ideally wants to harden further. The thought of losing a capacity at this stage would lend huge disadvantage to the farming industry, not least in further resulting in hardened rates.  That this pressure comes at a point in the industry when agri–inflation and so many other financial pressures are leaning on it, goes unnoticed by clients.  Very few farmers envisage there not being enough insurers. However, as a specialist farm broker, I am ever aware of where the point of equilibrium sits.  Attracting new blood to carry risk isn’t easy.  Consequently, it is a case of making sure existing capacities are not “burned out” by the vagaries of the farming industry and the risks it faces.  

“Brokers hold a responsibility in educating farming clients as to the importance of sustaining a healthy competitive insurance market.  When you consider cost of litigation and awards, and that agriculture still experiences a disproportionate level of fatalities every year, it isn’t hard to understand why underwriters remain focused. I am, however, a great believer in cooperation and I continue to believe a solution exists in a more collaborative approach to farm insurance between underwriters and clients alike.  There has to be incentive and I genuinely believe features such as low claim rebates and visible discounts for good risk management features should play a larger part.  

“There has to be trust shown between each end of the deal and there has to be logic applied to underwriting.  Too often I witness a reaction from capacity that is out of context with the broader farming risks under review. Further, too often there isn’t enough disparity in premium between a risk with a 0% loss ratio and another with 100%. Farmers can become disillusioned by their insurance experience, shared in the pub or more likely in their bench marking club, as a result.  As brokers we need to challenge underwriters on strategy.  With farming clients, engage with them and inspire them to invest in risk management to the benefit of all.  When you consider the cost involved in growing an acre of wheat with ammonium nitrate costing nearly £200 an acre alone, a £1000 per year spent on a good independent risk management consultant doesn’t seem much by comparison. 

“Going back to the early insurance days of seven farmers all putting into a pot every year in case their stack went up in smoke, each held a stake in their future.  As brokers, if we can instil the concept of collective responsibility and the impact any one event has upon the price, we all pay, I do think we can help our clients and our farm insurance market evolve to a more prosperous future.” 

Shetland insurance broker expands ahead of 30th anniversary

The only independent insurance broker on the Shetland Islands is expanding ahead of its 30th anniversary next year.  

TL Dallas opened in Lerwick in April 1993 and has a long-standing reputation for its considered, professional advice and excellent client care. Liam Peterson has joined the business this year, bringing the team up to six.

The Shetland team is headed up by Ruth Newbold, and benefits from being part of the wider TL Dallas Group. The family-owned business has 10 other offices across the UK and is also a founding member of UNA – the National Alliance of Independent Brokers. 

Ruth said: “We have recently expanded our team to six dedicated insurance brokers, with the appointment of Liam, and five of us have over 100 years’ of combined experience between us! We are a local business but benefit from having a bigger presence across the UK. Our membership of UNA also means we are in a really strong position when it comes to accessing the best insurance products for our clients. 

“Many of our clients have worked with us for decades, and at every renewal we seek to get the best possible outcome for our clients. What sets us apart from other brokers is we work especially hard to understand our clients’ businesses so we can add value when it comes to managing and insuring their key risk exposures adequately and cost effectively.”

TL Dallas works for clients across all sectors but has particular expertise in the contracting, marine engineering, shipping, transport and technology sectors.

Director and valued client, Gary Spence, from LHD Ltd in Lerwick, said: “We have dealt with TL Dallas for many years and have always found the staff to be very helpful and professional in all that they do. They provide specialist knowledge and a bespoke service tailored to our specific needs, and the fact that they are based on Shetland is a huge positive for us.”

In addition to representing many Shetland based business and individuals, TL Dallas is also a huge supporter of the local community. Ruth added: “We have always supported the communities here in Shetland, which we are all part of. That is why we are very proud to have raised more than £10,500 over the last few years for charities including Mind Your Head, Alzheimer Scotland, Macmillan Cancer Support, CRUK Relay for Life, MRI Scanner Appeal and Dogs Against Drugs. Whatever we raise is match-funded by the business which is fabulous. We have also provided sponsorship to community sports groups including Shetland Amateur Athletics Club, Shetland Badminton Association and Lerwick Amateur Swimming Club.” 

Polly Staveley, managing director at TL Dallas, said: “When many companies are consolidating offices into central call centres, we understand the true value of having a local presence and are fully committed to serving the people and businesses of the Shetland Islands. 

“Ruth, Lynne, Joanne, Rory, Fiona and Liam really care about their clients, and this shows through the number of clients who remain with us year after year, as well as the new client wins achieved this year. As the office continues to grow, we hope to create more local job opportunities for people in the Shetland Islands and look forward to many more years helping businesses and individuals with their insurance needs as well as supporting the local community.” 

TL Dallas advise on investment by Panoramic into APS

The Glasgow office of insurance broker, TL Dallas, has once again provided insurance due diligence services to Panoramic Growth Equity (Panoramic), the leading equity investor in fast growing, entrepreneurial companies, which is also based in Glasgow. 

Panoramic has invested into Aluminium & Plastics Systems (APS) Ltd, a leading stock-holding company selling aluminium and PVCu products to the construction industry. This marks Panoramic’s second investment into Northern Ireland and the 16th investment of Fund 2. 

Based in Lisburn, APS specialises in architectural aluminium glazing systems for commercial and residential buildings. The company also stocks a wide range of aluminium and steel sheets and extrusions, aluminium and PVC fascias, rainwater systems, windows and doors, louvers and roof lanterns. Established in 2000, APS has completed an impressive portfolio of projects and gained an excellent reputation in the industry. 

The TL Dallas due diligence consultancy service provides an insurance and risk health check review to investment firms acquiring equity stakes in businesses. Bernard Dunn, Doug Lapsley and Graham Murray from TL Dallas worked on the most recent project. 

Client director, Bernard Dunn, from TL Dallas, said: “We were delighted to undertake a review of the APS insurance programme on behalf of Panoramic Growth Equity. This review looked both at the company’s current insurance programme, as well as the levels of cover that might be required going forward, post-investment. Our review team encompassed both general and trade credit insurance specialists as part of the overall assessment of coverage on assets, liabilities, people and products.” 

Panoramic’s investment has enabled two of the founding shareholders, Alan Denver and Ivan Bradford, to retire from their operational roles at APS. With the support of Panoramic, co-founders, managing director Gary McNeill, and sales director, Chris Du Boulay, will continue to run the company, targeting continued expansion across Ireland and the UK. Alan and Ivan will remain as minority shareholders and provide ongoing strategic support to Gary and Chris. 

Gary McNeil, managing director at APS, commented: “Chris and I are delighted to have been backed by Panoramic and believe they will be a strong partner for APS through the next stage of its development. I would like to thank Alan Denver and Ivan Bradford for their hard work at APS since the Company was founded.”

David Atkinson, senior investment manager at Panoramic commented: “APS has demonstrated a track record of profitable growth over 20 years and developed a great reputation for design and service in the industry. We are pleased to support Gary and Chris in providing funding to build on the company’s success.”

Panoramic’s investment into APS was led by David Atkinson. Richard Moorehead, of HNH Corporate Finance, provided corporate finance advice to management. Legal advice to Panoramic was provided by Andrew Jennings and Kendra Mcullough of Shoosmiths. Consilium Chartered Accountants provided financial due diligence through David Holt and Colin McCrann. Legal advice to management was provided by Edwards & Co.

Contact Bernard Dunn, Doug Lapsley and Graham Murray on 0141 204 0330 or visit www.tldallas.com for more details.