Increasing costs in farm and estate sector to drive rates in 2009

Over the past four years there has been a downward pressure on insurance premiums for the farm and estate sector but this has not reflected the increases seen in claims costs, advises Norwich Union, soon to be Aviva.

As a result there needs to be an increase in rates and premiums in 2009 to more adequately reflect the risks they cover however, this will not be a blanket increase and each policy will be assessed individually to ensure the risk is correctly priced.

Besides an increase in the costs and frequency of large weather related claims there are a number of other factors that have contributed to the need for an increase in rates.

Barry Hogg, underwriting manager for agriculture, Norwich Union explains the key ones: "Underinsurance continues to be a major cause for concern where the amount of insurance cover that has been taken out does not equate to the actual value of the item insured. For insurers it means inadequately priced risks but for the policyholder it can be a threat to their livelihood as the insurance settlement might not be sufficient to

get the business back on its feet. It is important to regularly check

that you have the right level of cover to meet your needs.

"Fire claims can also be costly. The average cost of a large fire¹ has increased by over a third in the last 5 years². There are ways to help minimise the risk though so consider getting a competent person to carry out regular inspections of electrical wiring, junction boxes and circuit boards. And if you have a building that is unoccupied check that it is free of any combustible waste.

"Diversification has changed the face of farming, with 50% of full and part time farmers having diversified business³ as they look to increase their income source but with it this brings new risks to insure against.

"This can particularly be the case for public liability insurance where diversified activities or Right of Way access means there are more visitors to your estate or farm resulting in greater exposure to public liability incidents which can run into millions of pounds."