NFU Mutual, Gallagher, Markel and Skyline Partners team up on pioneering product for dairy farmers

Parametric insurance specialists Skyline Partners developed and computed the product, which is being distributed by co-developers NFU Mutual along with Gallagher. It is 100% underwritten by Markel.

The long-term intention is to investigate a range of on-demand parametric covers for the agriculture and horticulture sectors, which face changing climate-related losses.

Brokers were warned last year that they will lose out if they do not engage with parametric insurance, a fast-expanding offering that is becoming more mainstream.

The latest index-driven cover offers customers pre-agreed pay outs based on the trigger event of temperature, measured by independent satellite and weather-station data, topping the limit specified in the policy.

Payments

According to the creators, farmers will be able to use payments to cover the cost of losses in production and improve their farm infrastructure to combat the effects of heat stress.

The insurance is available in four levels of cover to suit risk appetite, budget, and herd size.

Research from NFU Mutual in 2021 among 153 dairy farmers found that 41% ranked heat stress as a priority risk for their business, but that 70% had yet to take further steps to reduce the risk.

Welfare

Chris Walsh, Farm Specialist at NFU Mutual, said: “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.

“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.”

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