Australia’s rural farmers have taken a hit financially, mentally and environmentally in recent years from historic droughts, a catastrophic bushfire season and now tariffs imposed from trade tensions with China.
During these testing times, farmers are relying on insurers to protect and secure their futures. It’s why James Hooper (pictured), managing director of Rural Affinity, is pleased to announce a new partnership with Munich Re and Great Lakes.
“Having partnered for 11-years previously, we know that our objectives and values are closely aligned,” he said. “Munich Re is one of the most respected brands in the insurance market and this is consistent with Rural Affinity’s ambitions.”
Hooper is sure that the security provided by partnering with Munich Re on a five-year agreement will provide his broker partners greater confidence in Rural Affinity’s service capabilities going into the future.
“We previously partnered with Munich Re and Great Lakes from 2006 till 2017, so we also know each other very well and we think our strategies and objectives are very closely aligned. For that reason, I think it’s a great deal for us and our brokers and their clients, providing security and certainty about the way we can service their needs going forward,” Hooper continued.
Rural Affinity offers a broad range of policy cover for its rural farmer client base, including crop insurance, cotton insurance, forestry and livestock, for example. But Hooper says the company’s latest “reconnection” with Munich Re should provide clients comfort in knowing they will receive premium support.
“I think the main thing with a brand like Munich Re is security and consistency,” he said. “Munich Re is regarded as a premium brand in the insurance industry and they’re known for their consistency and longevity and, for us, that’s all we’re looking for – that sort of security and certainty for our business and for other businesses and their clients.”
The partnership comes during challenging times for the insurance market, which has already been ravaged by the bushfire season and now faces uncertainty from the COVID-19 pandemic. Hooper says Rural Affinity and its clients have been struck significantly by the recent natural disasters.
“Our products were certainly impacted by the fires… through our forestry and farm pack products, we incurred around $12 million worth of claims and some of the bigger players in the market had claims much bigger than that,” he admitted.
Hooper says his customer base hasn’t been widely impacted by the pandemic, however, excluding the reduced prices on commodities, such as oil. Instead, he says his clients are still focused on recovering from the drought.
“I wouldn’t imagine that, in the scheme of things, coronavirus is a major impact on our customers even though the prices of some commodities have been impacted,” he said. “Knowing that our farmers are just in the process of coming through one of the biggest droughts in history, the relativity of coronavirus impacting the business compared to drought isn’t major.”
The drought ravaging farmers in NSW and QLD is still being managed because the rain has only just started to arrive. Because of this, he says farmers are still some way away from making a financial recovery.
“Certainly, drought has been a much bigger factor for them than coronavirus… they still won’t make any income from the recent rains for another six to 12 months,” he said.
For the few farmers who have experienced financial hardship from the pandemic, Hooper says Rural Affinity has policies in place to provide support. These policies have not been altered since the pandemic arrived.
“Fortunately, in our product range, we have very little exposure to the pandemic,” he said. “So, there’s no change in our product offering.
“Like everybody else in the industry, we have a plan to deal with financial hardship as a result of COVID-19 in terms of premium payment arrangements and things like that. We’ve already had to activate that a few times… that’s the type of thing we do, what we offer, and we’ve done that for a few customers already.”
There are also issues in the insurance market for rural farmers when it comes to multi-peril crop insurance, according to Hooper. He says Rural Affinity doesn’t have a solution for it because, without a government subsidy, it is “very complicated.”
“There’s certainly some gaps in the market, but they’re gaps because they’re very difficult problems to solve,” May explained. “Obviously the major one that gets a lot of focus is multi-peril crop insurance and the lack of it in Australia, mainly because there’s no government subsidy.”
Hooper says the complicated product has proven around the world that it can’t function without a government subsidy.
“… in the absence of that subsidy in Australia, that’s very, very difficult to solve that problem,” he added.
“We don’t have any immediate solution to that problem, and I don’t think our partnership with Munich Re – despite Munich Re being a major player in that market around the world – will bring any immediate solution. But we are working with the industry on that.”
