Saturday, April 27, 2013

Do the maths.

Various of the advisory bodies on 'bovine' tuberculosis have, over the years, proposed a jointly funded insurance scheme for reactor cattle and possibly consequential losses associated with herd restrictions.

This works well with other diseases, and in some countries, with management policies for any wildlife reservoir, for bT uberculosis. The latest scheme to be hatched up comes from the Animal Health and Welfare Board for England (AHWBE) who will report their cash saving ideas findings in the summer.

Defra's deputy Chief Veterinary officer Alick Simmons, had this to say:
... using insurance in some cases could serve the dual purpose of reduce the liability on taxpayers for animal disease and ‘incentivising the right behaviour’ among farmers.
Weasel words if ever we heard them. But from Lee McDonough, Defra’s director for animal health and welfare, a more realistic approach. She commented:
AHWBE has had ‘some initial engagement with the traditional end of the insurance industry’. She admitted there are ‘complication and hurdles to get past’, the biggest of which appears to insurance companies’ concern that the disease risk is simply too big.
Farmers Guardian has the full story.

But back to those 'complications' and 'hurdles'. A decade ago, Owen Paterson, as shadow minister, asked exactly the same question regarding the underwriting of bTuberculosis by the main loss adjusters.
After they'd finished laughing, the answer then was:
Recent contact with insurance industry early in 2003 indicated that, although companies are honouring existing policies, they are not offering new policies to cover TB in cattle herds, particularly in areas where TB is increasingly prevalent. This is because farmers do not wish to take the cover in areas where the risk is low (such as Yorkshire), but do wish to purchase cover in areas of high incidence (such as the South West).

However, the insurance companies consider that the financial risks in offering insurance policies in areas of high incidence are too high at present.

In 2003, when that PQ was asked,  5,460 herds in great Britain had TB restriction notices served and Defra shot 23,972 cattle.

In 2012, 9,032 herds in Great Britain  had TB restriction notices served and Defra shot 37,754 cattle.

 Do the maths. The insurance industry has .... and if exposure to risk was too high in 2003, just take a long, hard, look at it now.

Insurance companies are in business to make profit and TB premiums drawn from farmers still able to get insurance, are hemorrhaging the company's bottom line profit when they make the inevitable claims.

And insurance companies are not in the habit of offering umbrellas when it's raining.


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