FMG’s Head of Reinsurance Chris Bailey explains the complexities involved in offering hail cover this growing season.
At FMG we back the farmers and growers of New Zealand and have for over 115 years. That’s why we still cover hail damage in Bay of Plenty.
We’re the only insurer to do so, but with limited capacity. It’s all part of our long-term sustainable vision for resilient rural communities.
We’ve worked hard to make this available for our clients and it’s all thanks to reinsurance. So, what is reinsurance? FMG’s Head of Reinsurance Chris Bailey explains.
“We use over 30 different reinsurers for our programmes and what they do is take their share of the risk and diversify it with their risk around the globe. It’s basically insurance for insurance companies.
They work to a plan that things won’t go south in every geographic region at the same time, and that is how they manage to pool the risk of the many.”
The crop insurance market however has faced significant changes due to compounding events.
These include the withdrawal of a specialist crop insurer, large hail losses in Motueka in December last year, as well as continuing losses offshore from North American and Australian wildfires, all impacting a small number of crop reinsurers.
“These factors have seen our reinsurance partners reassess and reduce the support they are willing to offer for Orchard Fruit and Kiwifruit policy cover this year,” says Chris.
The nature of crop insurance means FMG can’t provide this cover without the support of specialist reinsurers, but FMG has taken on a significantly higher share of the risk to ensure this product is available to those who were able to secure it for the coming growing season.
However, from September this year FMG’s kiwifruit hail top-up reached full capacity for the Bay of Plenty region for the 2021-22 season.
“Despite the limits on capacity we continue to support kiwifruit growers and we’re the only insurer to offer this type of insurance this season,” says Chris.
Clients unable to secure kiwifruit hail top-up insurance with FMG for this season and who would like to register interest for next season should let us know. We will contact them prior to next season to discuss their requirements with them.