The recently discovered case of bird flu in commercial chickens in Indiana has led to the euthanization of 156,000 birds, and has once again highlighted the importance of livestock and business interruption coverage as part of a strong agribusiness insurance portfolio.
Crews have already been working to euthanize more than 245,000 turkeys to prevent the virus’ spread. Now, with chickens added to the list, the outbreak will cause a loss of about 401,000 birds. Officials have also added a six-mile “surveillance zone” around the area where the first trace of the virus was found.
The commercial effect on agribusiness in these areas will be great, and the strain of bird flu is said to be dangerous to all commercial poultry. About 65 egg and turkey farms fall in the six-mile zone, and they producer an estimated 4.5 million egg-layers and between 1 and 2 million turkeys.
Already, shares of poultry producer Pilgrim’s Pride Corp. fell more than they had in more than two months prior, and were 6.4% lower on Tuesday.
For insurance producers working in the agribusiness sector, the outbreak means a good opportunity to revisit clients’ insurance portfolios to ensure limits on livestock insurance are adequate and policies are up to date.
Animal mortality insurance obtained through a private carrier could also come into play, as it covers the market value of livestock killed in government-enforced culling. However, mortality is only generally taken out on high value livestock such as prize stud bulls.
Additionally, if the case of the mad cow disease crisis of the early 2000s is any guide, livestock producers who have failed to take out mortality insurance prior to the outbreak could be out of luck.
Business interruption policies may also come into play if the outbreak spreads, as could loss of income coverage.
Litigation is also almost certain if any of the infected livestock works its way into the food supply – though scientists say this particular strain of avian flu is not dangerous to humans.
