What to do when rain stops play - business interruption and the fertiliser services industry
Published 28 February 2017
A wet winter and turbulent spring can play havoc with farmers across the nation – but it can have a knock-on effect for the fertiliser industry as well.
Too much rain, allied with extensive riverine flooding in some regions, can turn fields into quagmires – or even leave them underwater entirely for extended periods. And that throws a curveball to fertiliser spreaders and storage depot owners, who are either unable to access fields for spreading, or may stockpile reserves of fertilisers far beyond normal levels.
Instances like these can play havoc with normal fertiliser business operations and also highlight the importance of having the right insurance program in place, according to Chris Russell from Gallagher Insurance Brokers’ Mulgrave Branch.
“I’ve spoken to a number of clients who have been adversely affected by wet weather conditions,” explains Chris. “This year seems to have been particularly problematic in many areas, but with extreme weather events in Australia set to become increasingly common in future years, it’s something every fertiliser business owner should be thinking about.”
Many AFSA members obtain their insurance through Gallagher, with the majority of policies taken out providing motor and motor liability cover through the Truckpac insurance solution.
Chris Russell points out that there are a whole range of other insurance covers available that can provide extra security and peace of mind for fertiliser business owners in uncertain times.
“An increasingly important cover is business interruption insurance – sometimes referred to as ‘Down Time Protection’,” said Chris. “If your business is unable to operate due to unforeseen circumstances – including extreme weather – this type of insurance can off-set your loss of income.”
Chris also warned against the danger of being underinsured. This is rife across all areas of Australian business, but the wet weather conditions in winter and spring have exacerbated the risk of underinsurance in the fertiliser sector.
“I came across an example where a fertiliser business, which would normally have about $10,000 worth of product in reserve, found itself hugely overstocked with $500,000 worth.
“Fluctuating stock levels like this create a major risk exposure for a business, so it’s important to make sure your insurance cover can accommodate them. If you’ve got a high level of stock which isn’t properly insured, in a worst-case scenario – such as total loss of stock in a fire – the insurance payout might only be a fraction of what the product is worth.”
The easiest solution, says Chris, is for overstocked businesses to alert their broker straight away so their sums insured can be adjusted – or just to make sure that their existing cover is adequate.
“There are some excellent insurance policies on the market that have generous sub-limits to cover losses,” Chris explained. “The problem is that many business owners don’t know whether their level of cover is right, and what is really covered in their policy.
"That’s where a broker can be so useful in providing advice, finding the right insurance cover, and making sure your business and livelihood are protected.”