Resource: Insurance Journal “What’s Inflating Agribusiness Insurance Costs” By: Joe Dunn, Angel Mendez & Scott W. Dunn
After reading the above cited article, it seems like the agribusiness industry is seeing increasing auto losses, along with increasing auto insurance premiums. In this article, it lists two scenarios for the causes of these increases and I will also use these scenarios for explanation.
Scenario 1: “As he does every day, a Californian farm labor contractor transports employees to and from job sites. One evening, while driving six workers home, the contractor drifts off the highway. He overcorrects, causing the van to flip several times. All six passengers, including 2 underage girls are ejected from the vehicle. Three men are pronounced dead at the scene and one of the underage girls later dies from her injuries.”
Scenario 2: “After inspecting a field to be harvested, a farm labor contractor employee stops at a bar and consumes five shots of whiskey and two 22-ounce beers in a three-hour period. He subsequently climbs into his truck and while texting, rear-ends a car stopped at a red light. A 4-year-old boy in the rear-ended car is killed instantly, while his mother and sister are injured.”
I know you are reading these scenarios and thinking these accidents could occur in any business, and this is true, but agribusiness uses “carpooling” frequently. Agribusiness also tends to be more connected to the community, so people may meet at local restaurants or bars to talk during or after the workday. In some cases it is hard to say when the workday officially ended, and when a claim goes to court, the judge could decide that since it was assumed the employee was still on the clock, the employer’s policy is responsible for any damages.
These types of losses are becoming far more common, but for businesses these losses have other consequences. Possible consequences include a higher annual premium, a company’s refusal to write the coverage, and other companies excluding drivers from the policy (leaving experienced workers unavailable). And if one company refusing to the write the coverage isn’t bad enough, depending on the severity of the losses, no company will offer to write the coverage at all. Luckily there are ways to help mediate these auto losses to show companies that you are willing to make sure it doesn’t happen again.
*Good driver selection
*Drug and alcohol testing
*Vehicle inspection and maintenance
*Accident response and investigation procedures
*Post-loss claim mitigation strategies
*Driver-incentive and discipline programs
*Mock DOT and OSHA audits
By beginning or continuing to follow these steps, you can help to prevent these losses and keep your rates low. You will also contribute to reducing the high premium increases the insurance industry is implementing to cover these large and frequent losses.
Returning to the scenarios detailed above, here are the outcomes:
Scenario 1: The farm labor contractor was found to not have a driver’s license and was sued by multiple parties. He ended up filing for bankruptcy and closed his business. The U.S. Department of Labor also sued the grower who hired him for violating worker safety and transportation laws.
Scenario 2: This driver was sentenced to 16 years in prison for gross vehicular homicide. The employer’s insurance ended up settling a multi-million dollar settlement.
Please do not think to yourself “this will never happen to me,” because it could, and it could potentially shut down your business. Accidents happen, I know it and the insurance companies know it too (it’s why they exist!) but they also know that there are ways you can work together to reduce the likelihood that they will occur. The more you can do for the safety of yourself, your employees, and other drivers, the less likely a claim could happen to your business.
By: Samantha Brensinger
American farming has come a long way in our short life compared to Europe, Egypt, and China. Our history as an independent country is very young. But in this time we have gone from using a plow, which in its day was quite the invention, to using seeders, choppers, and manure spreaders. Big equipment continues to evolve to the point where it doesn’t even need a driver because it is controlled by GPS!
Amazing advancements, right? But with this ever changing industry we also have to change how we write insurance for it. Equipment that has a driver to control it has different risks than equipment that is using GPS and technology to run it. While they are being operated differently, there are ways they still carry the same risks.
Similar risks, let’s say for a chopper, driven by a person vs. GPS:
*Equipment Breakdown- The equipment can get something jammed into the system that would cause it to break and require repair.
*Collision- You can still run into something, either another piece of equipment in the field or a person. What caused the collision is different (driver error vs. computer error) but the resulting collision damage to the chopper is still the same.
Different risks for a chopper driven by a person vs GPS:
*Hacking- A system ran by a computer, an i-Pad, or a mobile device that is connected to wireless internet or a server can be hacked. Having coverage for this risk cannot always be found on your standard Farm owner's policy.
*Driver Injury- If the chopper would happen to collide with another object, you have the potential of injury to the driver.
One change that has occurred no matter what piece of equipment a farmer is buying is the cost. Something that once cost $50,000 now can cost well above $300,000. These changes in value and how the equipment are operated need to be understood and properly insured. As an agent specializing in agribusiness and farming, it is my job to know and understand how your insurance needs to cover you as your farm evolves and the equipment you have varies.
It’s amazing to see how the agriculture industry/community adapt and overcome some of the toughest situations, and in doing so they become inventive. As we grow our history every day, I have no doubt we will continue to evolve and with it, the insurance industry also needs to evolve.
By Samantha Brensinger / Lead Farm Agent, AFIS